UK advertisers poised to spend an extra £1bn on Christmas campaigns

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Advertisers are expected to spend almost £1bn more marketing their products this festive season than last year, marking the return of the annual big-budget Christmas marketing battle.

UK companies are forecast to spend a record £7.9bn on advertising during the critical “golden quarter” to Christmas, retailers’ most lucrative three-month sales period.

That is the highest quarterly ad spend ever recorded by the Advertising Association and the research firm Warc since figures began being compiled in 1982, and a bounceback of more than 13% compared with last year’s festive season, which was muted amid Covid restrictions.

Last year, companies slashed spending on advertising and toned down their ad campaigns in response to the pandemic, but this year marks the return of the big-budget broadcast extravaganza. Spend on television ads is forecast to increase by 9% to £1.56bn – the fastest annual rate of growth in TV advertising spend since 2010.

The authors of the latest forecast sid the figures showed advertisers were expecting Christmas to be business as usual, despite widespread concern that supply chain problems, including clogged ports and shortages of workers and HGV drivers, could lead to empty shelves and inventory issues.

“The latest data demonstrate bullish trade in the UK’s advertising sector despite potential inflationary headwinds and supply chain disruption in the run-up to Christmas,” said James McDonald, the head of data content at Warc.

“Strong fourth-quarter projections for TV – a medium heavily leveraged by retailers during the golden quarter – and search, which encompasses activity on e-commerce platforms, suggest it will be largely business as usual for the industry this year.”

This season is expected to once again be a “digital marketing Christmas”, with spend on search advertising forecast to increase by 15% to £2.7bn, while online display advertising, where the most powerful players are Facebook and Instagram, rises by 12.7% to £2.4bn. Search and online display will account for 65% of all ad spend in the Christmas quarter.

Cinemas and the out-of-home advertising sector – which covers everything from billboards and posters to sites in train stations, airports, the underground and on buses – will experience the biggest proportional bounceback after being the hardest hit during the lockdown last year.

Cinema advertising, which has experienced a resurgence since the latest James Bond folm, No Time to Die, broke box office records last month, is forecast to grow by 3,160% year on year in the final quarter.

The out-of-home market, which practically ground to halt with almost no commuters or domestic travel last year, is expected to grow by well over 50% year-on-year.

While national and regional newspapers will have some growth, with spending on print advertising up 4.3% and 7.9% respectively, it is not enough to make up for double-digit percentage cuts last year.

However, spend on online ads on national and regional publishers’ websites is forecast to rise by 3.8% and 18% respectively, more than recovering the declines seen in those areas last year.

Spend on radio ads will increase by 10%, while print magazine ad spend will rise by 6%, with online up 7%, again growth at levels unable to claw back the cuts to budgets last year.