Television to drive UK adspend growth

30 June 2010

LONDON: Television is set to be the main driver of growth in the UK advertising market this year, according to the latest AA/Warc Expenditure Report.

The Expenditure Report – a free summary of which, including PowerPoint charts, is available here – estimates that adspend levels in the country will rise by 3.3% to £14.98bn ($22.6bn; €18.5bn) in 2010.

This marked an improvement from the previous forecast, made in April 2010, which anticipated a more modest uptick of 2.3% this year.

It also follows on from the expansion of 3.4% recorded in Q1 2010, which was the first such increase in six quarters.

Most media performed strongly in this period, with out of home revenues climbing by 14.6%, a figure that stood at 9.8% for television, 9.2% for the web, 8.7% for radio and 3% for cinema.

Looking ahead, TV ad sales should leap by 9.1% over 2010 as a whole, coming in ahead of the internet on 7.7%.

Out of home, radio, national and national newspapers are also poised to experience growth in 2010 after a challenging 2009.

More broadly, display advertising across all formats is pegged to jump by 4.2% in 2010, with TV and online boasting a combined share of approximately 40% in the first quarter in this area.

Recruitment is predicted to remain largely flat as a result of the residual uncertainty concerning the economic climate.

In contrast, other classified advertising, led by online search, will generate an improvement of 3.9% this year. Overall, the web now accounts for 69% of all classified advertising.

Online also boosted its share of total adspend by 3.3% in the year to March, with TV enhancing its position by 0.9% on this measure.

However, cinema and online were the only forms of main media to have seen growth in their ad revenues during this timeframe, both up by over 5%.

These gains were largely to the detriment of press and direct mail.

By sector, the recent cutbacks outlined by the UK government may lead to a decline of around 15.5% in the government and charity segment for 2010, and a somewhat smaller contraction in 2011.

Companies in all other major industries should commit more funds to advertising in both of these years, with the retail and consumables categories fuelling this process in 2010.

Elsewhere, financial services providers heightened their investment in advertising in Q1 2010 having consistently reined in their outlay since Q3 2007, a trend that will continue going forward.

"Despite the doomsday predictions as the government slashes adspend, the industry is in good health," Tim Lefroy, chief executive at the Advertising Association, said.

"Overall performance is actually outstripping the official forecasts."

In 2011, advertising expenditure will increase by 2.4%, with direct mail and regional newspapers the only channels suffering decreases year-on-year.

Data sourced from Warc