Prospects improve for UK advertising market

04 June 2010

LONDON: The prospects for the UK advertising market appear to be considerably better than was previously feared, a report from GroupM has shown.

According to the media unit of WPP Group, adspend levels in the country will rise by 4.2% year-on-year in 2010 to £11.9bn (€14.2bn; $17.5bn) overall.

This can be measured against the organisation's previous forecast, released in December 2009, which asserted that expenditure would remain largely flat.

GroupM now believes revenues will increase by at least 10% a month in the period to August, at which point the rate of expansion will slow to around 3%.

"Economic fundamentals are too poor to justify more enthusiasm, but advertiser confidence has tangibly improved in 2010," the company said.

"To rebuild brands is natural in the aftermath of recession, though we failed to predict the resulting bottleneck and consequent inflation in TV ad prices from March … which explains much of our uplift."

More specifically, television ad sales will jump by 11.6% this year, which constitutes a major turnaround from GroupM's last study, which anticipated this channel would generate a contraction of 0.2%.

The loosening of the purse strings among brand owners should also help deliver a further uptick of 3% next year.

Alongside favourable comparisons, price deflation will contribute to this development by encouraging some marketers to heighten their TV output and other "dormant" players to re-enter the fold.

While the cost of buying spots is expected to soar by 14.1% in 2010 as demand outstrips supply, this medium is still likely to offer attractive deals.

"Even with 11.6% growth in 2010, TV revenue will still be lower than 2008, and so will broad audience prices … TV is still cheap," GroupM said.

"Other traditional media have also enjoyed better than expected recovery in the first half of 2010 but their price stability compared to TV is evidence of this being more of a spike than a trend."

Elsewhere, the outlook for radio has also strengthened, with figures projected to leap by 6% in 2010 and 4% in 2011.

However, while the forecast for national newspaper advertising has been revised the slide of 6.6% outlined in December last year, totals will decline of 2%.

These print titles should return to growth in 2011, when will climb by 2%, although regional titles are likely to see continuing softness.

Outdoor advertising is also set to benefit from the broad rebound in the trading climate, improving by 7% in 2010 and 6% in 2011.

The internet is also due to witness an increase of 7.1% this year, as online "continues to outperform as related creativity, analysis and technology advance."

For 2011, GroupM argued that advertising spend in the UK would reach £12.3bn across all measured media. 

Data sourced from Reuters, Guardian, Dow Jones, Campaign; additional content by Warc staff