Group M upgrades its 2010 ad forecast to 8%
Group M has almost doubled its growth forecast for the UK advertising market to 8% this year due to a surge in national newspaper revenues.
“In common with many mature markets, the UK’s ad recovery in 2010 has been broad-based and better than expected,” Group M’s latest report says. “All the same, a year ago, when we imagined growth impossible, we would have dismissed as fantasy the 8% we now think 2010 will record. In retrospect, we should have given more weight to the effect low prices have on demand.”
Categories that have shown notable growth in the year to September 2010 include retail, food and beauty.
WPP’s combined media buying arm expects newspapers to grow by 6.6% year on year to £1.4 billion in 2010. This represents an additional £100 million compared with Group M’s forecast in June this year, which predicted a 2% drop. Next year, Group M forecasts a 2% increase in national newspaper ad revenue.
In the ‘This Year, Next Year’ forecast, Group M said the newspaper market has made an “excellent” recovery, in part helped by a continued spend by retailers after the World Cup.
Overall, Group M said display advertising, which accounts for around 85% of total newspaper ad spend, will rise 9% this year. In June, the group had said display advertising would be flat in 2010.
However, regional newspapers are not expected to do as well. Group M predicts a 5.3% decline this year, although that is better than its previous -7% forecast. The regional market is expected to struggle next year too, with Group M predicting a 4.2% fall.
By contrast, TV ad revenues are predicted to do increase substantially this year. After positive reports from UK broadcasters in recent months, TV revenues are set to increase 14% this year and 4% in 2011. This is an improvement on Group M’s earlier forecast, which predicted a smaller 11.6% rise this year.
However, Group M warned that despite the boost in advertiser confidence, TV budgets will remain much the same as they are now in 2011.
“Growth in 2011 will be harder to come by and our media forecast remains in the 3% to 4% range [for total UK advertising],” a media buyer said. “Taxes will rise quickly, sharply, and until further notice. Household spending will almost certainly fall in 2011.
“Our best hope for ad growth is the willingness and ability of UK plc to invest ahead of recovery. This cannot compensate for a lack of full-throated consumer recovery, but if marketers elect to advertise, it would be enough to keep media investment growing in 2011 even if the economy grinds to another halt.”