HENLEY-ON-THAMES: UK advertising faces two years of near zero spending growth, according to reduced forecasts for media expenditure published today (Thursday).

The predicted rises in advertising expenditure at current prices in 2008 and 2009 have been cut from 1.9% and 2.6%, respectively, to just 0.3% in both years in the latest Advertising Forecast, produced by WARC for the Advertising Association.

Judged at constant prices (that is, after adjusting for inflation), the UK advertising sector is already in recession, having had two successive quarters of declining expenditure.

The fourth quarter of 2008 is expected to report a 5% drop in expenditure at constant prices, though the volatile financial markets make long-term judgements difficult to make with certainty. 

Growth in advertising expenditure at constant prices is not expected to resume until Q2 2010.

This backdrop underlines the challenge for brand managers and media owners facing expenditure declines as well the opportunities for marketers to exploit the cheaper media costs and less cluttered environments created by recession to steal share.

Among the various media, marketing spend through national newspapers is set to fall by 3% this year and next at current prices, with regional press revenues declining by 7.8% and 5.7%. 
Direct mail is also likely to face a substantial drop, with a 4.8% decline in 2008 being followed by a 6.9% reverse in 2009.

Cinema – traditionally prone to wide levels of variation in terms of advertising income – is set to post growth of 2.3% this year, before reverting into the red with a 4.1% loss in 2009.

Television's revenues are due to drop by 2.8% this year, and 1.8% the year after, which is rather better than some of the more gloomy prognosticators have forecast for this period.

Online will grow by some 22.9% this year and by 14.7% in 2009. While these figures mark a decline in growth compared with previous years, the medium still looks well placed to increase its overall share.

Subscribers to WARC Online can find out more results from the Advertising Forecast – as well as see links to a range of related articles hosted on WARC – by clicking here.

To find out more details about the Advertising Forecast, click here.

Data sourced from the Advertising Forecast; additional content by WARC staff