LONDON: Trading conditions are beginning to improve in the UK advertising market, but caution remains among both brand owners and consumers.

ITV, the country's biggest commercial broadcaster, saw its ad revenues expand by 7% in the first quarter of this year, and predicted that totals could rise by between 15% and 20% in April.

This compared with a decline of 9%, to £1.3 billion ($2.0bn; €1.4bn), recorded over 2009 as whole, although the broadcaster said this performance was "ahead of the total market", which was down 11%.

Its share of peak viewing time rose by 0.4%, to 28.2%, in this period, and while its flagship station delivered a 5% contraction in commercial impacts, its stable of channels held steady, at 40% overall.

Despite this, the company warned in a statement that "the marked bounce-back in advertising spend in early 2010 should be seen against the context of steep declines last year."

"In the light of advertising market volatility and limited revenue visibility, ITV continues to plan on a cautious basis," it added.

Speaking at a recent conference in London, Sir Martin Sorrell, ceo of WPP Group, the UK-based marketing services conglomerate, also said that advertisers are no longer "staring into the abyss".

He further reported that although the global situation "turned a corner" in November last year, in Western Europe – and particularly Spain and the UK – the climate remained challenging.

"People think flat is the new up. I'm amazed when media companies trumpet a reduction in the rate of decline. We will only declare victory when we see growth," said Sorrell.

"The overriding theme is that clients still feel they have to cut costs. You can't cut your way to prosperity. You've got consumers cautious and corporates still very cautious."

More positively, new figures from Nationwide revealed that consumer confidence in the UK reached a two-year high in February, with its index of popular perceptions rising to 80 points overall.

This total was double that recorded in the same month in 2008, and reflected growing optimism about the prospects of the domestic economy.

However, spending confidence levels continued to decline, with the proportion of people believing it would to be a good time to buy household goods slipping by six points, to 39%, during the month.

Data sourced from ITV, Daily Telegraph, BBC; additional content by Warc staff