The Advertising Association and WARC latest quarterly expenditure report sees search plateau while investment in social media grows.
UK advertising spend is forecast to hit £14bn in the festive quarter, up by 8.2% year-on-year (YoY), according to Advertising Association (AA)/ WARC’s latest expenditure report.
UK adspend grew by 11% YoY to £12.3bn in Q2 2026, with full year spend now expected to reach £51.3bn, which equates to a 9.9% increase from the previous year.
AA/WARC have predicted spending to rise a further 6.5% in 2027 to reach £54.7bn.
The figures revealed retail media had the biggest impact on spending in Q2, commanding 8.4% share of total investment in advertising and growing by almost a third (31.2%) YoY. The report attributed this to the channel opening up more touchpoints along the consumer journey.
Double-digit growth was also seen across social media (22%), cinema (24.5%), out-of-home (OOH) (12.7%) and addressable TV (12.7%).
Growth in search advertising was smaller at 9.3%, which seems to have plateaued when compared to the Q1 2026 figures where that figure stood at 9.8%.
Direct mail, online classified, digital radio and TV have also seen a slight increase in spend at 4.5%, 4.4%, 3.2% and 2.6%, respectively.
Suzy Young, head of media data, WARC, said: “Q2 2026 ad investment remained strong despite geopolitical headwinds and weak consumer confidence linked to the Middle East conflict.
“Growth was boosted by the FIFA World Cup, but increasingly reflects AI investment, as platforms enhance targeting while both new AI-native companies and established tech firms compete for customers – a dynamic that improves efficiency while generating new demand, helping offset weaker sentiment. This AI-driven boost is especially pronounced in the UK, given the maturity of its digital advertising market.”
Festive forecast
As the industry heads into the golden quarter (Q4), brands will be ramping up their campaigns across a range of channels in the run up to Christmas.
Adspend across social media is projected to rise by 18.5% YoY, alongside retail media at 16.2% and addressable TV at 15.1%.
Cinema and search are also expected to see growth throughout the festive period with spending increasing by 8.6% and 7.8%, respectively.
Increased football in shopping centres and the high street is expected to see OOG and DOOH spend rise by 7.5% and 9.5%.
Stephen Woodford, chief executive, AA, said the “strong growth momentum” in Q4 represents a “£1.06bn boost compared to the same period in 2025”, which underlines the “vital role advertising plays across all channels and media formats in supporting business growth during the golden quarter and beyond”.
Social media to lead growth in 2027
AA/WARC has revised its full year UK adspend forecast by 1.8 percentage points to 9.9%, reaching £51.3bn for 2026. This upward trend is expected to continue into 2027 to reach £54.7bn.
Growth will continue to be led by retail media (23%), social media (20.7%) and addressable TV (14.7%) in 2026 and 2027. The report predicts a rise in spend across these channels to be 13%, 13.3%, and 10.9%, respectively.
OOH, search and digital radio are also expected to have modest growth for the full year, reaching 10.8%, 9.1% and 9.1%, respectively. Growth across search advertising is projected to come down to just 6.6%, followed by digital radio (4.2%), digital OOH ($.3%) and TV (1.7%).
