The big Christmas ad launches are just around the corner and marketers will be spending 7.3% more than last year in the hope of boosting consumer mood. It sounds like a healthy rise but it’s less than the year as a whole, which is predicted to be up by 8.2% according to a new report from WARC and the Advertising Association.
Four in every five pounds will be spent online with as much as 40% of budgets going on search (including retail media), reflecting the ongoing investment in AI as companies bank on technology’s ability to drive efficiency and performance. This rush to digital could soften the impact of the blockbuster festive commercials, although VOD spend will increase by 17.2%, so we will still see them all on repeat.
Cinema and OOH will see smaller rises of 3.7% and 3.1%, while radio and direct mail are well behind at 0.5%.
Advertising Association CEO Stephen Woodford said: “The Christmas advertising season is the key time for brands to inspire shoppers and win share in this critical retail period. 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.”
James McDonald, WARC’s director of data, intelligence & forecasting, said: “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. Looking ahead, 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.”
It’s a contradictory picture, especially when the same report shows that business and consumer sentiment has been falling steadily since early summer in anticipation of Rachel Reeves’ budget on 26th November. Next year’s growth is forecast to be 6.6% (down from 8.2% this year) to a total of almost £50bn.
If creative departments are going to stay in business, the industry needs to produce some properly memorable Christmas ads this year. So far we know that McDonalds and Asda have both picked The Grinch to star in their campaigns, while Sainsbury’s is returning to the The BFG.
Those choices are screaming efficiency and performance rather than originality, but we look forward to being proved wrong.
