UK advertising spend rose 8 per cent to a total of £10.6 billion (€12.2bn) in the first three months of 2025, +1.4 percentage points ahead of the April forecast, according to the AA/WARC Expenditure Report – with improved performance of search and retail media critical to this rise.

“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,” commented James McDonald, director of data, Intelligence & Forecasting, at WARC. “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.”

What’s going on

The UK advertising market is forecast to grow by 6.8 per cent this year to £45.4 billion, a slight increase (0.4 pp) since the April forecast. Both consumer and business confidence in the UK have shown a marked improvement in June despite a recent bump in inflation.

While AA/WARC expects the UK’s overall GDP growth to remain relatively flat at 1.1 per cent in 2025, UK adspend is still expected to see 3.5 per cent growth, after inflation.

Channels expected to make gains:

• TV VoD (+10.1 per cent)
• Search (+9.4 per cent)
• Online display (+9.2 per cent)
• Cinema (+9 per cent)
• Out of home (+3.1 per cent)
• Radio (+1.2 per cent).

The long-term forecast remains unchanged for 2026, with the advertising market expected to grow 5.6 per cent to reach £48 billion.

Conclusion

“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,” added Stephen Woodford, chief executive of the Advertising Association. “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.”

Reactions

Responding to the report, Tom Curry, UK Managing Director, Yahoo, said: “Cautious optimism is returning to the advertising industry, buoyed by digital and online channels. In times of economic uncertainty, businesses rely on data-driven and results-focused channels, which means the focus needs to shift towards performance and maximising conversions. This explains the increase in advertising budgets for online advertising channels, but decreases in other channels may be a mistake for advertisers. The most effective means of increasing conversion and awareness is through a multi- or omnichannel strategy, which can help improve the isolated results of single channels. Audio, for example, saw a continued decrease in budget, but alongside targeted digital campaigns can be effective at building brand loyalty and driving awareness – especially as things like podcast listenership continue to increase nationally. Effective use of data such as geo, contextual insights or listening habits can fuel effective campaigns on audio, making it a channel that performance-driven marketers should not overlook.”

Michael Isaacs-Olaye, VP Sales & Partnerships UK at Happydemics, commented: “Confidence in the UK advertising market is holding firm, with brands continuing to back themselves amid tough economic conditions. However, this latest report shows that investments are being channelled into immediate, activation-driven campaigns designed to drive quick wins. During uncertain times, brands can’t afford to neglect long-term, emotionally-resonant initiatives that strengthen brand equity and fuel future demand. But brands don’t have to settle for one or the other, as they can still realise quick wins alongside long-term brand building if they have the right strategies and understanding of campaigns. It comes down to better, more transparent measurement. The key to further UK ad growth will be in helping teams move beyond surface-level metrics to see what’s really performing. If marketers can understand and prove how ads are resonating and shifting perceptions, as well as how they boost recall and drive purchasing decisions, then they can experience the best of both worlds.”

Saj Nazir, Head of Mediahub’s Radical + Disruptive Lab, said: “An 8 per cent rise in UK adspend in Q1 signals that brands are prioritising agility and cultural relevance. Search grew by 12.3 per cent, social media jumped 14.7 per cent, and cinema surged 19.2 per cent – all channels that thrive on immediacy, storytelling, and earned engagement. The industry is moving away from rigid schedules towards approaches that keep pace with culture. Success is less about sheer volume and more about standing out through originality. This requires rethinking around how and where brands engage audiences, focusing on immersive, earned-first formats that demand attention rather than passive consumption. Today, the most valuable media spaces are those that foster genuine surprise and engagement. The strongest ideas don’t just live in campaigns – they live in culture.”

Tom Jameson, Insights Manager at WPP Media, said: “The latest AA/WARC report shows that retail media and search are leading the charge in UK ad growth. That momentum reflects a wider shift we have seen too, with retail media expected to account for nearly a fifth of global ad spend by 2030. But if brands want to make that investment work harder, they need to rethink where those interactions are happening. Our research provides the answer: 70 per cent of online purchases now happen outside the home, whilst people are commuting, socialising, or out shopping. For brands ready to get ahead, this is the opportunity. It means moving beyond outdated assumptions of a customer journey tied to a sofa and postcode. The brands that will win are those who plan for this real-world behaviour, intelligently connecting DOOH, mobile, and retail media to meet their customers in the moments that truly matter. This is where the next wave of growth will be unlocked.”

Ben Putley, CEO at Alkimi, stated: “The growth in search and online display spend reflects a shift toward channels that offer both immediate performance and real-time adaptability. In today’s economic climate, agility is a competitive advantage, and advertisers are under increasing pressure to deliver measurable, rapid ROI. It’s no surprise that brands are prioritising spend in formats with transparent fee structures and clear funnel efficiency. It’s no longer just about where audiences are, but how efficiently and accountably advertisers can reach them. This focus on performance and flexibility should open the door for emerging formats like gaming, a channel with huge, engaged audiences but comparatively low adspend. To unlock its potential, the market needs tools that allow for dynamic investment without compromising on measurement or trust.”

David Sargant, Director of Advertising Operations at SBS, said: “It’s encouraging to see the UK ad market prove resilient and increasingly dynamic in areas like search and retail media, which saw a combined 12.3 per cent uplift in Q1. Retail media’s evolution into a fully-fledged omnichannel ecosystem spanning in-store, offsite, and CTV environments, can be credited to the smarter use of first-party retail data in privacy-safe ways. With the channel projected to reach $169.6 billion globally in 2025 and grow to $252.1 billion by 2030, making up 18 per cent of all ad revenue by decade’s end, it’s clear that retail media is no longer a tactical add-on. Rather it’s becoming a strategic pillar of the modern media mix. For advertisers navigating economic uncertainty, the appeal of channels that offer agility, precision, and measurable outcomes has never been clearer. But unlocking this value requires more than repurposing in-store formats online. It means investing in programmatic access, audience-based planning, and data integration that connects retail media to broader brand and performance goals. At SBS, we’re seeing first-hand how retail media networks are maturing and as the sector grows, especially in markets like the UK, it’s those who treat it as a serious performance channel, not just a digital shelf, who will see the greatest return.”

Cameron Russell, Head of Marketing at Marketreach, said: “It’s powerful to see our industry outperforming April’s forecast, with spend predicted to grow this year. Marketers are investing, but they’re understandably selective. The current focus on direct marketing tactics, including a +3.6 per cent increase in direct mail spend, is a clear signal that brands are prioritising channels that deliver real connection and measurable impact. When ads are everywhere we look, mail’s ability to capture attention and engagement only continues to grow. A recent JICMAIL report found that consumers opened 81 per cent of all the direct mail they received in Q1 of this year, with 18 per cent prompting a discussion, 12 per cent prompting a website visit and 7 per cent making a purchase and/or donating. Across the board, engagement, conversions, and effectiveness is rising, and when marketing budgets are tight, I’m not surprised to see marketers putting more money behind direct methods to drive sales. And while direct marketing favours sales and promotion-based advertising, it’s worth remembering that direct mail can move beyond performance. We see mail play an increasingly important role in brand discovery, and those familiar, intentional touchpoints can go a long way towards building brand loyalty and trust, even in difficult times.”

Clare Turner, Chief Commercial Officer at Pearl & Dean, added: “It’s fantastic to see cinema adspend up 19.2 per cent in Q1 2025 – pretty clear evidence that the big screen is booming. Cinema has found its feet after a few turbulent years, and there’s no question that brands are returning in full force. The success of titles like Bridget Jones: Mad About The Boy and Captain America: Brave New World, show just how magnetic and powerful the medium of shared storytelling in an intimate space really is.  But… the best bit? This is just the beginning! The slate for H2 includes blockbuster franchises, heavyweight award-season contenders, and long-awaited sequels that are guaranteed to draw massive crowds – think Downton Abbey: The Grand Finale,  The Running Man and of course Avatar: Fire and Ash and Wicked: For Good. For brands, this presents a golden opportunity. Cinema delivers unmatched attention, emotional impact and cultural relevance and right now, it’s the most effective medium to connect with highly engaged audiences in a distraction-free environment. Cinema also provides the opportunity for brands to embrace their creativity and extend their reach to new audiences beyond the actual screen itself – by creating exhibitor partnerships for tailored promotions, creating immersive or experiential tie-ins that enhance or sit alongside the cinema-going experience, and amplifying engagement through strategic online social activations.”

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Categories: Advertising, Articles, Markets, Research

Tags: advertising, UK, WARC, Yahoo