Prospects mixed for UK ad market

13 December 2011

LONDON: Advertising expenditure levels are due to rise in the UK this year, but continuing economic uncertainty means the prospects for next year may be less healthy than previously thought.

According to the latest AA/Warc Expenditure Report, adspend levels rose by 1.5% to £3.8bn in the third quarter of 2011, with a similar rate of expansion, of some 1.3%, anticipated for the fourth quarter.

Tim Lefroy, chief executive of the Advertising Association, said: "Adspend is showing steady growth in the second half of 2011 and this looks set to continue through 2012, despite the gloomy economic outlook."

Cinema and radio saw ad sales climb by 18.8% and 13.4% in turn in Q3, but this was offset by contractions across the print sector.

Notably, popular national Sundays recorded a fall of 28.4% and popular supplements declined 30.6%, following the closure of the News of the World in early July.

More broadly, the Expenditure Report's predictions for total UK adspend in 2011 remained unchanged from those made in October, meaning ad sales are expected to increase by 1.6% to £15.9bn.

Less positively, projections for 2012 have been downgraded from the 4.7% improvement outlined in October, and now stand at 3.8%, under which scenario the ad market will be worth £16.5bn.

This reflects the deteriorating economic outlook and the impact of the Eurozone crisis on global corporate and consumer confidence.

Moreover, if inflation is taken into account, adspend is actually likely to decline by 2.9% in 2011, with a marginal 0.7% rise then predicted for 2012.

Indeed, the impact of the financial crisis has been so profound that total UK adspend throughout the forecast period is only expected to be on a par with levels recorded in the late 1990s.

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

Data sourced from Warc