UK ad market to return to growth in Q3

09 February 2010

LONDON: The advertising market in the UK will return to growth in the third quarter of this year for the first time since 2008, a new forecast from the Advertising Association and Warc has predicted.

According to the AA/Warc Expenditure Report – more details about which are available here – total adspend in the country is estimated to have fallen 12.7% in 2009 on an annual basis, at current prices.

Overall, this would amount to the most severe recession faced by the industry since the Advertising Association's quarterly survey was launched in 1982.

Revenue levels decreased by 13.2% in the third quarter of 2009, a rate of contraction that is expected to moderate to 5.2% in the fourth quarter.

Tim Lefroy, chief executive of The Advertising Association, argued "the underlying data show not just the painful recession effect overall, but the dynamic reshaping of the UK advertising landscape. For some it's the perfect storm, for others the perfect opportunity."

By medium, the internet was the only channel to see figures improve in the opening nine months of last year, up by 3.7% in all.

In contrast, press ad sales were off by 25.5% in the same timeframe, with outdoor down by 20.4%, and TV, radio and direct mail all posting declines in the mid-double digits.

Cinema witnessed a more modest drop of 1.8%, and actually enjoyed an expansion of 10.2% during the third quarter.

The web's share of adspend also rose by just over four percentage points between the year to September 2008 and the year to September 2009.

Press was down by a similar amount on this measure, with all other major media essentially flat, the AA/Warc Expenditure Report said.

Looking forward, it is estimated that advertising revenues will decline by 3.8% in Q1 2010 and 0.8% in Q2, before registering an uptick of 2.8% in Q3, after nine successive negative quarters.

Display is likely to be flat this year, as consumer sentiment remains weak, while recruitment could also continue to struggle due to on-going softness in the employment market.

Rufus Olins, chief executive of Warc, said "there is clear evidence that the UK's worst media recession in three decades was bottoming out by autumn 2009, and prospects for a return to growth in adspend later this year are now good. However, as recent UK economic data has shown, the recovery is still fragile."

The newly launched AA/Warc Expenditure Report, is based on actual advertising spend, and uses data gathered from a wide variety of media sources.

It combines the previous Quarterly Survey of Advertising Expenditure and the Advertising Forecast, and from this month onwards will be updated once a quarter. More information is available here.

Data sourced from AA/Warc; additional content by Warc staff