Advertising Expenditure Almost £19 Billion In 2005

After adjusting for inflation the rise means a 0.6% increase in real terms and represents the fourth consecutive year of positive growth since the advertising recession of 2001. 2004’s figure for total advertising expenditure stood at just under £18.5 billion, with these figures including production costs as well as media spend.

The largest share of advertising expenditure went on the press sector with 45.3% of spend in the UK. Television took second place (25.4%), with direct mail in third (12.5%), followed by internet (7.2%), outdoor (5.5%), radio (3.1%) and cinema (1%).

In display advertising, television was the largest medium with a 35.2% share of expenditure, followed by press (31.8%), direct mail (17.3%), outdoor (7.6%), internet (2.5%) and cinema (1.4%).

The figures also showed that in the press sector as a whole advertising expenditure declined by 1.8% in 2005 when measured at current prices (3.7% in real terms). National newspapers, regional newspapers and business magazines all suffered from decreased levels of advertising spend following strong growth in 2004, whilst spending in directories rose by 5.3% in 2005, amounting to £1,131 million when measured at current prices. Consumer magazines were also up with a rise of 1% to £827 million.

Advertising expenditure in the television sector grew by 3.6% in 2005, amounting to £4,820 million when measured at current prices (a rise of 1.5% in real terms), whilst spend in the outdoor and transport sector increased by 5.8% (3.7% in real terms) to reach £ 1,043 million. Outdoor and transport and television both achieved double-digit growth in the first quarter of 2005. The largest growth in percentage terms in 2005 was made by the internet, which rose by 65.6% when measured at current prices (62.3% in real terms) to reach £1,366 million, up from a revised figure for 2004 of £825 million.

Online advertising expenditure share is expected to reach 10% by 2007, according OPera’s latest Economic and Media Forecast for 2006 and Beyond (see UK Adspend To Hit £15 Billion By 2010).

Advertising spend in the cinema and radio sectors fell by 2.1% and 4.5% respectively in 2005 when measured at current prices (4.1% and 6.4% in real terms) following growth in 2004, and expenditure on direct mail also fell (by 3.9%) over the course of 2005 as a whole, although it did experience positive growth in the final quarter of the year.

A recent report by KPMG and Thomson Intermedia showed that total advertising spend was up 3.4% in Q1 2006 compared with the first quarter of 2005 (see Digital And Direct Media Drive Ad Spend Up).

Advertising Expenditure by Medium, 2004 & 2005

			2005	2004	Annual % change
			£ million	£ million	Current Prices	Constant Prices
National Newspapers			1,974	1,919	-2.8	-4.8
regional Newspapers			3,132	2,994	-4.4	-6.3
Consumer Magazines			819	827	1	-1
Business and Professional			1,082	1,064	-1.6	-3.6
Directories			1,075	1,131	5.3	3.2
Press Production Costs			660	653	-1	-3
TOTAL PRESS			8,742	8,589	-1.8	-3.7
of which display			4,399	4,356	-1	-3
of which classified			4,343	4,232	-2.5	-4.5
Television			4,653	4,820	3.6	1.5
of which production costs			698	723	3.6	1.5
Direct Mail			2,469	2,371	-3.9	-5.9
Outdoor and Transport			986	1,043	5.8	3.7
Radio			606	579	-4.5	-6.4
Cinema			192	188	-2.1	-4.1
Internet			825	1,366	65.6	62.3
TOTAL ALL MEDIA			18,472	18,956	2.6	0.6

Media Shares of Total Display & Classified Advertising Expenditure 2005

		2005% share of
		Display and Classified		Total Display
Press		45.3		31.8
Television		25.4		35.2
Direct Mail		12.5		17.3
Outdoor and Transport		5.5		7.6
Radio		3.1		4.2
Cinema		1		1.4
Internet		7.2		2.5