UK advertising spend 'will fall until 2011'

By Alistair Houghton on Jul 6, 09 04:20 PM

ADVERTISING spending in the UK will be mired in decline until 2011, figures released today revealed.
China will also overtake the UK this year as the world's fourth largest advertising market, according to predictions from media firm ZenithOptimedia.

The firm, which is owned by French advertising group Publicis, has downgraded its forecasts from just three months ago after first quarter spending was below its expectations.
It had expected the UK market to decline 8.7% to £11.39bn this year, but now expects a steeper fall of 10.5% to £11bn.
The year-on-year slump will continue into 2010 with a fall of 1.4% to £10.87bn. compared to a previously forecast rise of 2.3% to £11.65bn, and the market will only return to growth in 2011 with a 2% increase to £11.09bn.
Radio is expected to see the largest fall this year, of 15%, followed by newspapers and television, which are expected to slide 14.6% and 14% respectively.
ZenithOptimedia said it had cut its forecasts for the UK in light of "continuing economic difficulties".
The UK figures fall below those for Western Europe, which is expected to decline 9.2% this year and grow 0.2% in 2010.
But the US fares worse with a forecast drop of 10.6% this year and 2.7% next year.
Not all regions are predicted to decline however and ZenithOptimedia said of the 79 markets it covers, 25 are still growing.
The firm said advertisers had slashed costs as they were "faced with extreme uncertainty" and expected steep drops in revenues.
"In uncertain times advertising is often treated as a discretionary expense and cut early, despite much research that shows companies maintaining their ad expenditure in a recession come out of it stronger than those that do not."
In the UK radio spending is expected to suffer the most and will not return to growth in 2011. But ZenithOptimedia said this is despite radio listening at an all-time-high, with 45.8 million listeners every week.
Even internet advertising spending was expected to fall this year and next, by 1.8% and 1.1% respectively. This compares to growth at its 2004 peak of 137.8%.
But expenditure in the sector is still forecast to almost match newspaper spending - currently the biggest section of the market - by 2011.
This is just the latest bad news for a sector that has unsurprisingly been hard hit by the recession.
Just a few days ago the Advertising Association said ad spend fell 4% in 2008.
A survey from WPP last month showed global spend was expected to drop 5.5 percent in 2009.
Leave a comment below to tell us your predictions for the industry.