The Grinch may well be making an appearance in the upcoming festive advertising spree, but according to the latest data from the Advertising Association and WARC, he is not coming for advertising spend. 

UK advertising spend is set to increase by 7.3% to a total of £12bn in the final quarter of the year. Figures which will provide a much-needed festive boost to the industry. 

The festive advertising flurry is not the only reason to be cheerful. According to the new forecasts, published today (30th October), total ad spend is set to rise by 8.2% to £46.0bn during 2025 as a whole and a further 6.6% to almost £50bn (£49.1bn) in 2026.

The advertising market is predicted to see an £814m boost compared with the same period in Q4 2024, with advertising continuing to play a vital role in supporting economic growth during the Christmas season.

The UK’s biggest brands are set to unveil their festive campaigns in the coming weeks, driving activity across a range of channels, including online formats and Video on Demand (VOD). 

By media channel, VOD is forecast to see the largest boost, with spend rising 17.2% year-on-year to £430m in Q4. However, fluctuation is expected in the total TV market due to a decrease in advertiser confidence, dampened by economic uncertainty.

On the high street, cinema (3.7%) and out of home (3.1%) will benefit from festive footfall, with smaller rises also anticipated in direct mail (0.5%) and radio (0.5%).

While parents strive to get their children off their screens over the festive period, advertisers continue to invest the bulk of their spend in online platforms. Altogether, online formats are expected to account for 83% of all ad spend during the Golden Quarter, with 40% for search (including retail media) alone.

Long live long form

Despite the continued growth of online platforms, the data also underlines the continued firepower of the experience economy. A stand out performer in the second quarter of the year was cinema, due to releases in April to June, including A Minecraft Movie, Lilo & Stitch and Mission Impossible - The Final Reckoning.

In the first half of 2025 (H1), ad spend increased by 8.9% to £22.0bn. WARC estimates that search and online display formats (including retail and social media) accounted for just over 81% of total ad spend, rising to £17.9bn. This is due, in part, to ongoing investment in AI to drive efficiencies and performance improvement across advertising platforms.

Budget uncertainty hits consumer confidence

Looking ahead, AA/WARC expects growth to moderate slightly in the second half of 2025 (H2), leading to an increase of 8.2% for the year as a whole. In 2026, UK ad spend is forecast to increase by 6.6% to £49.1bn, with TV expected to return to growth (5.8%) alongside a further increase for radio (2.4%). Online formats are expected to record further growth, with search and online display up 9.2% and 6.7%, respectively.

Despite positive results in the UK’s ad market, the latest report shows business and consumer sentiment has fallen since early summer, with concerns around potential tax increases in November’s budget and above average inflation likely to further undermine confidence.

Stephen Woodford, CEO, Advertising Association, said: “The Christmas advertising season is the key time for brands to inspire shoppers and win share in this critical retail period.”

He continued: “Our Advertising Pays 2025 report shows every £1 spent on advertising returns £4.11 in profit for medium to large businesses and £1.89 for micro-small businesses, underscoring the importance of advertising investment, especially during the festive season. Despite ongoing economic uncertainty and caution in the run up to the November budget, the advertising market is still expected to see growth next year.”

James McDonald, Director of Data, Intelligence and Forecasting at WARC, added: “The latest AA/WARC forecasts show advertisers continuing to tap into consumers’ digital consumption habits, with online formats now accounting for four in every five pounds spent on advertising in the UK. Growth in video on demand services and search – particularly on retail platforms – underscores a prioritisation of digital engagement and its influence on the path to purchase.

He continued: “Looking ahead, advertising investment is forecast to rise steadily into the golden quarter, and while overall growth is expected to moderate slightly in 2026, the latest figures suggest a stable trajectory for the UK’s ad market despite a languid economy.”