Adspend rises in UK

17 October 2012

LONDON: Adspend rose by almost 4% in the UK during the second quarter of this year, the latest AA/Warc Expenditure Report has revealed.

Total advertising revenues, excluding direct mail, expanded by 3.8% in Q2 at current prices to £3.7bn. Moreover, the rate of growth came in ahead of the forecast figure of 2.9%.

Cinema enjoyed the most substantial uptick in returns, climbing by 23.9%, bettering the internet on 14.8%, outdoor on 9.9%, radio on 9.4% and television on 4.4%.

Even in real terms, after accounting for inflation, the market increased by 1.1% between April and June 2012 when measured against the same period in 2011.

When including direct mail – which is omitted from the overall total due to a change in definition by the Royal Mail – the level of expenditure was pegged at £4.2bn at current prices.

Tim Lefroy, chief executive of the Advertising Association, said: "Advertising continues to enjoy solid growth prospects. It remains a potent tool for boosting consumer spending and getting money flowing round the economy again."

Elsewhere, the analysis suggested that advertising revenues leapt by 2.4% in the first half of the year at current prices. If using constant prices, however, the sector contracted by 0.7% on an annual basis.

Looking forward, projections for industry growth for 2012 as a whole stood at 2.1%, potentially yielding £16.8bn, including direct mail.

This can be compared with the forecast figure of 2.5% outlined by the previous Expenditure Report in July, reflecting a softening in the outlook.

The predictions for next year were also slightly downgraded from 4.4% to 4.1%, mirroring the ongoing challenges to the country's fiscal recovery.

Despite this, the fact that growth is likely to surpass the 4% benchmark, taking the sector to a value of £17.4bn, constitutes a steady improvement for the market.

"The forecast for UK adspend strengthens in 2013 as inflation subsides and real disposable income increases for the first time since the financial crisis," said Suzy Young, Warc's data editor.

For more information on the AA/Warc Expenditure Report, please click here.

Data sourced from Warc