The recent news that online advertising now accounts for more than three-quarters of the UK’s total ad spend could be mistaken as the sound of an impeding death knell for more traditional modes of advertising.
In truth, such a presumption would be extremely premature, with WARC’s latest Expenditure Report showing that out-of-home, broadcaster video-on-demand and search all recorded strong performances towards the close of 2023.
After a difficult few years, the solid growth experienced by the sector over the last 12 months is cause for considerable optimism, while a series of major events this summer, including the 2024 Paris Olympics and Euro 2024 in Germany, will offer ample opportunity for large-scale investment right on the UK’s doorstep.
Even more promising is that the AA and WARC forecast a return to growth for a wide variety of formats in 2025. So what does it all mean?
Online advertising conquers all
While the very clear advent of online’s dominance indicates a shift in future budgetary priorities and ways of working, it certainly does not mean that tried and trusted formats such as out-of-home and linear TV have lost their relevance.
It does however suggest that we are in the full swing of a permanent shift towards the format as the dominant mode within the industry.
As a result, online advertising will inevitably command the majority of investment, attention and innovation over the coming decades.
Now accounting for 78% of total UK adspend, it isn’t hard to see why online is so popular with advertisers. Its speed, flexibility and unparalleled international reach simply cannot be paralleled elsewhere – and it isn’t bound by the same rigidities faced by less adaptable traditional formats.
“While it’s not surprising that online has come out on top, its pick-up across the industry, to the point that over three-quarters of all UK ad spend is accounted for by online for the first time is a significant milestone in the ongoing digital evolution of the advertising industry,” RAPP executive chairman UK and APAC, Chris Freeland says.
“Online offers increased targeting capabilities, measurability and analytics, flexibility and adaptability, global reach, and improved customer interaction. So any business that chooses to overlook online does so at their own peril.”
This sentiment is largely echoed by Zappi co-founder and CEO, Steve Phillips. He says the shift towards digital advertising, cannot be denied, adding that it is happening at “a breakneck pace”, which simply serves to “underscore how critical it is for marketers to have solid digital capabilities” in 2024 and beyond.
“Importantly, this digital transformation also heightens the need for marketers to deeply understand evolving consumer behaviours and preferences,” he continues.
“Consumers are spending more time than ever shopping online and engaging with digital media and platforms, making faster, better, and more often consumer insights critical for delivering impactful and captivating ads.”
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Old dogs and new tricks
Although online is now all-important for marketing and advertising budgets – it far from eclipses the tried and trusted more traditional methods, which still very much have a role to play.
Despite positive news for online and an optimistic golden quarter, the overall picture for much of 2023 was a lot more muted.
In the face of these economic difficulties however, good old out-of-home continued to prove irresistible, growing at 9.7% year-on-year, with display out-of-home growing by a staggering 18.1% in the fourth quarter.
There is optimism also to be had for broadcaster video-on-demand, which despite facing a challenging 2023, also registered promising growth figures of 15.9% in the golden quarter – ahead of what is set to be a bumper year of television with a blockbuster summer of sport.
“While online advertising will continue to dominate, particularly around the summer of sports, as 43% of Gen Z fans will use social media platforms while watching live events, there is still huge amounts of value in more traditional forms of advertising, including TV, cinema, OOH and broadcaster video-on-demand. All of which are showing strong growth this year,” JOAN London manager director, Tom Ghiden points out.
“As brands begin to make noise around some of the world’s biggest cultural and political events, it’ll pay for brands to explore all forms of advertising formats, rather than hanging their hats on one area. Those who authentically advertise, while pushing the boundaries of creativity and experimentation will stand out from the crowd.”
As Ghiden explains, many offline formats are set to return to growth this year, and as such it would be foolish to dismiss them as irrelevant.
With online now the UK’s dominant advertising channel – which means it will command the vast majority of future investment – it’s important for brands and agencies alike to remember that offline formats still have a very active and valuable role to play as part of a large supporting cast.
