GroupM revises UK ad spend forecast for 2009
UK ad spend is now expected to fall by 12% year on year in 2009, according to a revised forecast by GroupM.
The company had predicted a higher 14% decline in 2009 UK ad spending in its mid-year forecast, but revised the figure due to a positive fourth quarter.
The revised forecast, which forms part of GroupM’s series of ‘This Year, Next Year‘ reports, also predicts that ad spending in 2010 will be the same as 2009, with another small improvement.
GroupM’s futures director, Adam Smith, said: “Both 2009 and 2010 are looking slightly better than we imagined six months ago. Confidence seems to be improving, though based on anecdotes rather than substance. This alone may be enough to revive marketing investment, but it cannot make any easier the fiscal and household consolidation which lies ahead in 2010.”
Smith added that he expects advertisers to maintain investment going into the new year, despite an uncertain market and continued pressure to get “more marketing for less money”.
“We still have most media types negative on revenue in 2010, but media value is about innovation as much as price,” he said. “A high and rising proportion of digital marketing is already performance-based, and raising the ROI bar in traditional media.”
The report found that ad spend in Q4 was boosted by the normal festive season, the release of previously frozen ad dollars, as well as a reflection that the current recession really began in Q4 2008.
However, GroupM said that genuine ad spend growth will require a recovery of advertiser demand in the struggling sectors, such as financial services, automotive and food – all of which have shown “no real sign [of a recovery] yet”, according to the report.
Between January and September, these three sectors made up 22% of the ad market but provided 42% of the year on year fall in ad revenue volume.
However, Smith predicts that the UK could be one of the first markets to come out of the advertising recession. Zero growth in 2010 would still place the UK ahead of other major European ad markets, all of which are expected to remain in single-digit-negative in 2010, according to GroupM’s global ad forecast, which is due to be released next week.
Despite sitting ahead of European markets, GroupM predicts that the UK will only return to substantial ad growth (more than 5%) in 2012.