German adspend slow to recover

13 October 2010

FRANKFURT: Advertising expenditure will not reach pre-crisis levels in Germany until 2012, a report has predicted.

PricewaterhouseCoopers, the consultancy, estimated the country's media industry should expand by 3.6% annually, to €68.1bn ($94.2bn; £59.5bn), from 2010–14.

Advertising sales are due to increase at 4.8% a year, ahead of the 3.2% uptick in consumer spending.

In 2010, the media sector is likely to be worth €59.1bn, a 2.6% improvement, again outpaced by a 3.5% surge in advertising returns.

However, ad expenditure is pegged to come in at just under €15bn this year, over €1bn below the amount recorded prior to the economic downturn.

Only by 2012, when figures hit €16.2bn, will brand owners' collective outlay match that leading in to the recession.

The web's share of the ad market stood at 22% last year and will total 32% in 2014, leapfrogging TV as the most valuable advertising channel in 2011.

"The popularity of online advertising was well-established before the economic crisis, although this greatly accelerated the structural transformation of the media industry," said Werner Ballhaus, head of technology, media and telecommunications at PwC.

"Consumers are increasingly moving to the internet and spending more time online. Advertising budgets will follow this trend."

"The development of the mobile internet is adding impetus to this change, thanks to attractive devices, increasingly fast mobile networks and flat data rates."

Indeed, PwC stated mobile access revenues would rise by 13.7% per annum to €4.2bn in 2014.

Consumers' outlay on all web services will surpass €11bn at the end of the forecast period, according to PwC.

IPTV is anticipated to be another important area, with 2.9m households using relevant appliances in four years time, although this is equivalent to a 7.5% minority of all residences.

"In view of above-average growth rate of 17.9% from 2010 to 2014, it is only a matter of time before IPTV becomes established," Ballhaus added.

Data sourced from PricewaterhouseCoopers; additional content by Warc staff