Sir Martin Sorrell’s advertising group, WPP, has called an end to the Brexit shock that has hammered the ad market since the EU referendum vote in June and upgraded its forecast for the industry.

The world’s largest marketing services company, which manages more than $100bn (£79bn) a year in advertising spend through its Group M media arm, said it was surprised to be upping its forecasts for ad spending in 2016 and 2017, describing the short-term impact of the Brexit vote as negligible.

The upgrade comes as more retailers unveil their Christmas adverts. Sainsbury’s advert is a short animation with James Corden on vocal duties, while Waitrose tells the story of an arduous journey home for a young robin.

Group M is upgrading its original forecast of 6.3% growth to 7.2% this year, and from 5.8% to 7.2% for next year, which would make the total UK market worth £18.8bn.

Adam Smith, futures director at Group M, said: “While the effect of the future European Union exit on the UK is unknown, the short-term impact was negligible. To our surprise, we are revising UK advertising growth up.”

However, this growth is being almost totally fuelled by spending on digital advertising, with “pure-play digital” companies such as Google and Facebook hoovering up the lion’s share.

The report continues to highlight tough market conditions for traditional media owners such as TV companies and newspaper and magazine publishers.

Group M has moved to downgrade its forecast for traditional media spending from -1.1% to -2.6% this year and from 0.5% growth to -1.4% in 2017.

Even factoring in digital ad income, the national newspaper ad market is expected to contract by 12% this year and another 9% next year.

“Print brands donate content to Facebook in hopes of generating return traffic [and revenue] but seem disappointed,” said Group M. “Facebook is a simpler, better-sold alternative to print’s competing panoply.”

For TV broadcasters, growth has been cut from 7.4% at the beginning of this year to just 2.6% by year end. Group M has cut is 2017 TV ad growth forecast from 4% to just 1%. Many analysts believe that this is too rosy and that the £4.5bn UK TV ad market could contract by as much as 4% next year.

ITV, which will be banking on big debut ratings early next year for The Voice which it poached from the BBC for £50m, has already announced it is cutting 120 jobs.

Last week, the broadcaster, which has had recent success with drama Victoria and revived comedy Cold Feet, revealed it was facing a 7% TV ad decline in the final quarter, its worst drop in the period running up to Christmas since 2008.

Adam Crozier, ITV’s chief executive, looked to ease investor nerves, explaining that £50m in savings planned for next year would allow it to handle a fall of up to 3.5% in its own TV ad revenues next year.

Group M expects Google and Facebook, which already take about three-quarters of all new digital ad spending in the UK, are set to make life harder, mounting an attack on the broadcasters’ big spending advertisers that are also identified as “relatively light on digital” spend.

The media group has identified five categories of advertisers – including retail, food and cosmetics and personal care – that spend a combined £1.5bn on TV advertising annually, a third of the total, as targets for the internet giants.

“[Google and Facebook] will target these categories more aggressively in the future,” said Group M. “There is a limit to what they can take from rivals and from print. TV is a tempting target. The ambition of pure-play digital vendors to conquer TV territory and categories will be hard-won, but today’s undisputed winner is pure-play digital.”

The UK’s top five spending TV advertisers are Procter & Gamble, Reckitt Benckiser, Sky, Unilever and BT which spend a combined £400m annually.