LONDON: UK adspend will increase by 6.6% this year and by 2.3% in 2011, the latest AA/Warc Expenditure Report has suggested.

Marketing budgets are likely to be bolstered due to changes in the tax laws in January 2011, with advertisers front-loading their spending ahead of the planned increase of VAT from 15% to 17.5%.

Marketers are expected to benefit from increased growth in 2012, due to beneficial effects stemming from the London Olympic Games.

Total year-on-year growth for Q3 2010 was 7.3%, with all media recording an increase with the exception of regional newspapers, business magazines and cinema.

TV was the star performer, with spend rising 15.8% from Q3 2009. The channel's share of total display ad spend has increased from 33.8% to 35.8% over the same period.

Meanwhile, out-of-home enjoyed a 12.4% increase in adspend, to reach a share of display of 8.4%, while online rose 11% over the same period.

This equated to an 8.1% share of total display advertising and a massive 69.2% share of classified advertising.

But print media spending has suffered over recent months, with total press down 2.3% in Q3 2010.

This decline is partly due to online's growing domination of the classified sector.

Tim Lefroy, chief executive at the Advertising Association said: "It's great to see another strong set of results in Q3, boosted by the World Cup and the ever-increasing popularity of big TV events such as the X Factor.

"The forecast looks healthy for the remainder of the year with a 5% increase predicted for Q4. It's encouraging to see such growth during tighter economic times and today's figures illustrate the continued importance of advertising to the UK economy."

Suzy Young, data editor at Warc, added: "While UK adspend has exceeded all expectations so far in 2010, it's wise to remain cautious when looking to next year.

"We expect spend to increase by just over 2% in 2011, but there are risks ahead, especially with government spending cuts and concerns about unemployment." 

Warc's full Expenditure Report can be accessed by subscribers here.

Data sourced from Warc/Advertising Association