TV adspend will continue to fall in UK

22 January 2010

LONDON: Television advertising expenditure levels in the UK will not return to growth until 2012, Enders Analysis has predicted.

According to the company's figures, TV adspend in the country fell by 12% last year, and failed to cross the £3 billion ($4.8bn; €3.4bn) barrier for the first time since the start of the new millennium.

The opening quarter of 2010 could bring an improvement in the 1% to 2% range, but annual totals will fall by 2.5% both this year and next, before the onset of the recovery in 2012.

Toby Syfret, an analyst at the research firm, said that advertisers' emphasis on cutting costs was one of the key drivers of the overall malaise, and has come to the fore when appointing media agencies.

"The last year has seen an unprecedented number of media pitches driven, we are told, by client procurement departments," he said.

"There appeared widespread agreement among buyers and sellers alike that this was exerting a strong downward pressure on advertising spend and that the pressure, which has steadily increased in recent years, will continue into 2011 and beyond."

Overall, Syfret estimated that the media accounts up for review over the course of 2009 delivered some 40% of all TV advertising revenues.

Ofcom, the communications industry regulator, is considering changing the rules regarding the amount of advertising that can be shown by public service broadcasters, which could exacerbate this situation.

"If the overall volume of airtime goes up by an extra five-to-ten percent, you might get a revenue reduction of two-to-four percent because demand isn't growing to fill the gap," said Syfret.

ITV, the country's largest commercial broadcaster, has faced a particularly challenging period during the downturn, although Enders reported that it posted a 10% uptick in ad sales in December.

Data sourced from Financial Times; additional content by Warc staff