31 Oct 2023 | Omar Oakes

TV ad market plunges 13% amid ‘worst recession’ fears

ITV CEO Carolyn McCall at The Future of Media in 2022

The UK TV ad market shrank by nearly 13% year-on-year over the summer months, new forecasts have revealed, amid warnings that the sector is in its worst recession in 15 years.

The latest Advertising Association/WARC Expenditure Report has forecast a 12.8% drop in TV advertising in the months between April and June compared to the same period last year.

That collapse is driven by a sharp slowdown in linear TV advertising and not mitigated well enough by a 5.6% projected growth in video-on-demand.

It also confirms recent earnings reports in July by ITV (total advertising revenue down 11% between April and June) and Channel 4 (down 8% for January-May 2023).

During its last earnings update in July, ITV CEO Carolyn McCall said: “This is the worst advertising recession we’ve seen since the global financial crisis [in 2008].”

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McCall went on to explain that underlying demand from advertisers was still strong, but that “caution” was holding many back from spending. “They are cautious because the [economic] outlook is cautious around interest rates,” she said.

Channel 4, which forecast the TV ad market would be down 6% this year, agreed with media agency comments to The Media Leader that the sector faces a U-shaped 2023 with a weak middle six months bookended by strong first and fourth quarters.

In July, C4 chief operating officer Jonathan Allan said: “[Advertisers and agencies] are approving money quite late, they’re all retaining a lot of flexibility in their businesses to make sure they can manage anything to do with consumer demand. So it’s quite a late market at the moment.”

Digital formats resilient in tough market

Overall, the UK ad market managed to report marginal growth overall for the quarter (1%) to reach almost £9bn (in line with previous forecasts by AA/Warc).

Key online formats, including search (+5.3%) and online display (+5.8%) registered growth as did out of home (OOH, +4.4%), which continued its recovery after the Covid pandemic collapse.

Looking ahead to forecasts for the full year, AA/Warc expects adspend to grow 2.6% to reach £35.6bn in 2023. Double-digit growth is expected from broadcaster video on demand (BVOD) at 16.1% year-on-year, with increases also projected for online display (7.4%), OOH (7.7%) and cinema (7.6%).

Adspend in the second half of the year should have received boosts from sporting events like the Fifa Women’s World Cup and the Rugby World Cup (both broadcast on ITV), as well as the success of the Barbie and Oppenheimer movies at the cinema.

Next year, AA/Warc predicts the UK’s ad market is set to grow by 3.9% to reach £37.0bn, a marginal downgrade from a July forecast of +4.0%. There should be increased advertising activity around a UK general election, the Euro 2024 football championships, and the Olympic Games.

Stephen Woodford, CEO of the Advertising Association, said, “Advertising continues to show itself as a weathervane for the UK economy, with the advertising market expected to grow slightly more than the economy, with both barely in positive figures.”

ITV CEO Carolyn McCall is among the speakers at this year’s Future of TV Advertising Global conference in London on 5-6 December. Book now while places are still available. More speakers include: