Christmas 2023: Advertisers Spend Big

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It’s mid November, Halloween is over and Bonfire Night has been and gone. That really only means one thing in ad land: Christmas is here. And Mariah Carey and her characteristically concise Christmas list isn’t the only thing waiting in the wings, Christmas ads are coming. At Rabbit Comms we love a Christmas advert and we’ll do a deep dive on our favourite and least favourite in due course. But for now, we wanted to zoom out and look at how the industry has approached this year’s festive season. 

To understand more, we examined some figures released by the world advertising research centre (WARC) and it paints an interesting story. Brands are expected to spend a record £9.5bn this Christmas season, that’s a 4.8% increase on the same period last year. But hang on, I know what you’re thinking – isn’t this due to inflation? Well let’s take a look across different media. Advertisers have increased the value of their investment in both emerging and traditional media. Broadcast video on demand, for example, is set to increase by 20.2% well above inflation, while out-of-home will grow by 10.3%, and online display by 9.1%. Television remains a draw, with £1.5bn predicted to be spent on it in the final quarter. 

However despite a record amount being spent and investment above and beyond inflation in some media, WARC says that much of the growth can still be put down to our old friend inflation. With real terms growth in the fourth quarter is forecast to be just 0.3%. “The market is effectively flat when measured at pre-Covid prices,” James McDonald, director of data, intelligence and forecasting at WARC told Marketing Week. 

Hold on, though – it’s not all doom and gloom. WARC thinks there’s a silver lining. Brands are apparently throwing more cash into the holiday ad game because they’re seeing the magic of Christmas advertising. Think emotional display ads and performance marketing in retail environments. McDonald goes on to say, “They’re spending more because they see the benefits of Christmas advertising.”

With tricky economic circumstances, the Christmas ad season is set to be an even bigger boost to the advertising industry than usual. Overall ad spend is set to decline a further 2% this year. Performance in the fourth quarter will add £430m to 2023’s total market value – for the first nine months, that figure is £486m, resulting in the Christmas period accounting for 47% of total  revenue this year, according to AA/Warc. 

Maybe this is one of the reasons brands started the festive ad party early this time with some films hitting the market in October. Turns out, almost half of adults get their gift ideas from holiday ads, and a whopping 70% of folks aged 25 to 34 say Christmas ads are the ultimate mood boosters. Aldi’s offering, a Willy Wonka parody with Kevin the Carrot, is so far the victor when it comes to ad effectiveness, according to System1. Aldi has scored the highest possible score, 5.9 stars, while M&S Food, Sainsbury’s, Vodafone, Coca-Cola and Boots all scored above 5 stars.

As mentioned we’ll take a deeper dive into our take on this year’s entrants next month, but in an industry feeling the effects of tricky economic circumstances, it’s reassuring to see Christmas ads holding their own in 2023.

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