UK to Emerge from Ad Recession with 0% Growth

December 7, 2009

This article is included in these additional categories:

Europe & Middle East | Financial Services | Media & Entertainment | Mobile Phone | Radio | Television

Though UK ad spending is expected to be down 12% this year, the UK could be out of the ad recession sooner than expected, with an expected 0.1% year-over-year increase in growth in 2010 following better-than-expected revenues in Q409, according to a revised forecast from GroupM.

Although the UK – which was among the first into ad recession – is expected to experience practically zero? growth in 2010, this still places it ahead of the other major European ad markets, which are expected to experience single-digit drops next year, Group M said.

GroupM’s new, longer-range ad model predicts the UK will return to substantial (5%+) ad growth only in 2012, writes MediaBuyerPlanner.

Ad Spend Down 12% in 2009

Ad spending in the UK is expected to be down 12% this year, with TV ad spend down 11.6%, print down 20.4%, radio down 14.6%, and outdoor down 17.2% Internet and mobile spending are expected to be up 2.7% for the year.

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Next year, TV is expected to fall 0.2%, while print will drop 6.2%, radio will be down 5% and outdoor will grow 2.2%. Mobile and internet spending will jump 7.3%, according to the agency group.

“Both 2009 and 2010 are looking slightly better than we imagined six months ago,” said GroupM futures director Adam Smith. “Confidence seems to be improving, though based on anecdotes rather than substance. This alone may be enough to revive marketing investment,” he said, adding that it will not make any easier the fiscal and household consolidation which lies ahead in 2010.

Marketers are expected to maintain ad investment going into 2010 despite uncertain consumer demand and continuing ‘procurement’ pressure to get more marketing for less money, Smith said, adding that the prediction presents a paradox that can be explained.

“We still have most media types negative on revenue in 2010, but media value is about innovation as much as price,”? Smith noted. “A high and rising proportion of digital marketing is already performance-based, and raising the ROI bar in traditional media.”

The report also said higher Q409 ad spending was influenced by normal seasonal advertising, the released of previously frozen ad dollars, and a reflection that the true onset of the current recession began in Q408.

True ad spending growth will require a recovery of advertiser demand in the most stricken sectors: financial services, automotive, and food, of which there is no real sign yet, the GroupM report revealed. Between January and September the three categories comprised 22% of the ad market, but provided 42% of the year-over-year fall in ad revenue volume.

In October, ZenithOptimedia downgraded its predictions for 2009 and 2010, saying global ad spending will drop nearly 10% this year, to about $445 billion, down from the 8.5% drop predicted in July. Zenith said, however, that the market would hit bottom by the end of this year, with global ad growth of 0.5% in 2010.

About the GroupM Report: “This Year, Next Year” is part of GroupM’s media and marketing forecasting series drawn from data supplied by holding company WPP’s worldwide resources in advertising, public relations, market research, and specialist communications.

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