Despite ongoing economic turbulence and rising inflation, the latest AA/WARC Expenditure Report paints a picture of growth for the UK ad industry.

In the first quarter of 2025, UK advertising spend rose 8% to a total of £10.6bn, at a rate of +1.4% ahead of the April forecast. 

“The latest survey data highlights buoyancy in certain corners of the UK ad market, with total investment growing just ahead of forecast despite a wavering economy and a sustained period of global trade turbulence,” says James McDonald, Director of Data, Intelligence and Forecasting at WARC. 

Growth was driven largely by search, including retail media, which saw growth of +12.3%, and online display at +10.1%, including social media on +14.7%.

“Advertisers were seen to pull budgets forward and double down on agile formats within search, social, and retail media in response to the volatility sparked by new US tariffs. Brands appear to be adapting to the current environment by reallocating budgets tactically, with the outlook for the year remaining broadly positive despite persistent headwinds,” explains McDonald.

Despite economic challenges and a 3.6% inflation increase, both consumer and business confidence in the UK have shown an improvement in June. While AA/WARC expects the UK’s overall GDP growth to remain relatively flat at 1.1% in 2025, UK adspend is still expected to see 3.5% growth, after inflation.

The UK advertising market is forecast to grow by 6.8% this year to £45.4bn, an increase of 0.4% since the April forecast. 

Culture-fuelled category growth

Across category spend, channels expected to experience growth in 2025 include TV Video-On-Demand (VOD) at +10.1%, search at +9.4%, online display at +9.2%, cinema at +9.0%, out of home at +3.1% and radio at +1.2%.

With a summer of sport underway in the form of the Women’s Euros and Rugby World Cup, culture is fuelling category growth. While strong growth of cinema has been driven by big budget releases such as Bridget Jones: Mad About The Boy and Captain America: Brave New World. While Mufasa: The Lion King and Wicked continued to make waves post-release, showcasing the power of long-form storytelling. 

Growth of search and online display can be attributed to advertisers looking to maximise budgets, as marketers look to short-term solutions to mask uncertainty created by socio-economic unknowns. While the impact of US tariffs begins to settle, and a UK trade deal has been secured, there are still many macroeconomic unknowns leading advertisers to invest with caution.

“Further growth in the first quarter of 2025 is welcome, particularly following the launch of the UK Government’s new industrial strategy which recognises advertising as a priority sector. The announcement that brand advertising will be exempt from the incoming Less Healthy Food restrictions has also provided important clarity for advertisers, ahead of the industry’s agreement to implement these from October 2025,” added Stephen Woodford, Chief Executive, Advertising Association.

He continued: “With our latest Ad Pays 2025 report showing advertising supports 1.7 million jobs, we will continue to monitor advertising expenditure and work with the Government to highlight advertising’s contribution to the UK economy.”