INSIGHTanalysis: Media Healthcheck – February 2005

February saw Starcom UK Group claiming that online advertising expenditure had increased by 52% to £507 million, accounting for 3.4% of total adspend in 2004 (see UK Online Advertising Enjoys Dramatic Growth). Starcom attributed this dramatic growth to the mass uptake of broadband, with heavy promotion and advertising campaigns resulting in broadband enjoying an 81% increase year on year.

Research from advertising.com confirms this confidence in online advertising, predicting that traditional advertisers will increase their online adspend by 70% in 2005, concentrating their online dollars on rich media, streaming content and behavioural targeting (see Traditional Advertisers Forecast To Increase Online Adspend).

Media research firm, Borrell Associates predicted last month that US local online advertising would hit $3.9 billion in 2005, up 46% on 2004, with paid search reaching $329 million(see US Online Adspend To Reach $3.9 Billion In 2005).

TV adspend in the UK was another hot topic within the media industry throughout February, with television advertising revenue reported to be growing at its fastest rate since 2000, according to data released by media group ZenithOptimedia (see TV Adspend Fuelled By Elections).

ZenithOptimedia and Starcom UK both predict TV adspend will increase by 12% in the first quarter of 2005, aided by the prospects of a general election and the continued recovery of the UK economy. Media buying agencies claim that the proposed general election in May and the strengthening of the economy have increased TV advertising demand.

Speaking to MediaTel INSIGHT, John Overend, joint managing director of OPera Media, confirmed the industry consensus saying: “January and February TV revenues are much stronger than expected and way ahead of original forecasts.”

Media consultancy agency Billets verified this positive outlook, forecasting that UK TV revenue will grow by 4% year on year in 2005, fuelled by commercial broadcaster Channel 4 and interactive revenue sales.

Last month saw Channel 4 claim its strongest January performance for five years with a 10.3% audience share.(see Channel 4 Reports Record Performance In Five Years). Channel 4 was revealed to have grown in the commercially important 16 to 34 and ABC1 audiences by 28% and 6% respectively, as well as seeing an increase in its share in multi-channel homes by 8.4%, a rise of 24% on 2004.

A report published in February by analysts PricewaterhouseCoopers, predicted that UK TV advertising revenue will be increasingly fuelled by multi-channel broadcasters as commercial channels become constrained by their multi-channel counterparts.

The research also identified the impact the new BBC digital channels will have on advertising revenues, with the BBC’s success predicted to affect traditional and multi-channel viewing in equal measure (see Multi-Channel TV Predicted To Lead Adspend).