The growth in advertising spend represented an ongoing, resilient recovery from the Covid-19 pandemic, according to the annual Expenditure Report from the Advertising Association (AA) and Warc.
Enjoying a ninth consecutive quarter of growth following the pandemic, the advertising industry saw its total spend rise by 4.3% between July and September 2022 to a total of £8.5bn.
The continued growth in spending - an estimated 8.8% over the whole of 2022 - has managed to keep pace with inflation, with real-terms spending falling just 0.1%.
AA and Warc, however, also predicted that growth would slow in 2023, which would result in it falling behind inflation.
Forecast to grow 3.8% to £36.1bn in 2023, advertising spend would in fact fall by 3% in real terms.
Stephen Woodford, chief executive of the AA, said that the steady growth in spend was a positive sign for recovery, as investment had held up despite significant headwinds.
He added, however: “The economic pressures of 2022 including high inflation’s impacts on the wider economy and on media costs means in real terms spend is likely to be flat. These pressures all contribute to slower growth projections for the year ahead.”
James McDonald, Warc’s director of data, intelligence and forecasting, added: “With the economy enjoying modest growth in November, and inflation appearing to have reached its peak, it is likely that the UK narrowly avoided slipping into the recession at the end of last year that many had feared – but a downturn now seems unavoidable in 2023.
“Despite an air of resilience in recent market results, a looming recession will put pressure on ad trade this year.”
Excluding the pandemic-hit year of 2020, growth of 3.8% would mark out 2023 as having the weakest rise in a decade.
“The silver lining,” he added, “is that our current modelling suggests that the slump will be short-lived, with advertising investment set to lift by 5% over the first nine months of 2024.”
Growth was not divided equally between all advertising media, however. The strongest performers included cinema advertising, forecast to have grown 149% compared to 2021, and out of home (OOH) advertising, at 33.7% total.
Shaun Jones, managing director of Emerge Advertising, Wales' largest billboard advertiser, told Printweek that while much of OOH's growth was in digital, his own firm was seeing rapid growth after throwing its weight behind paper and paste board acquisitions.
Now owning more than a third of Wales' billboards, the firm has seen year-on-year growth of 200-300% in paper and paste, and around 150% in digital advertising.
The rapid growth in OOH spending, Jones said, has been part of the sector's recovery since Covid, when traffic was reduced to almost nothing.
Now that cars are back on the road, bidding wars on prime-time slots in digital boards have driven up spending from advertisers, he said.
"Logic says to me that the industry is making a massive mistake betting too heavily on digital, which is why it's been a fantastic opportunity for us.
"While everyone else is running away from [paper and paste], we're running to it because I think there will be a correction in a couple of years."
He added: "You're getting more value for money on paper and paste, and it costs less. You have 100% of the airtime, compared to 16% on a digital board."
On the other end, direct mail advertising is forecast to have grown just 1.8% over the year, and to shrink by 6% in 2023, downgraded by 1.5% from the bodies’ October forecast.
