UK Adspend To Hit £15 Billion By 2010
Total UK adspend is predicted to top £15 billion by 2010, with online advertising expenditure share expected to reach 10% by 2007, according OPera’s latest Economic and Media Forecast for 2006 and Beyond.
OPera project total advertising spend in the UK to rise to £13.2 billion in 2006, up from £12.8 billion this year, with advertising growth predicted to increase by 4.5% year on year in 2006, significantly up on the 2.4% performance of 2005.
This figure reflects relatively fragile consumer demand, the added benefit gained from next year’s football World Cup and the generally bright economic outlook towards the end of 2006.
In particular, OPera expects display advertising growth to enjoy a surge in popularity over the next five years, with expenditure forecast to hit £11.8 billion in 2010, up from £9.5 billion this year.
Separating the different media, OPera predicts online advertising to continue the strong growth that it has seen recently, with the growth this year at 40% slowing to 35% next year. By 2010, the value of online advertising is projected to reach £2.3 billion, up from £912 million in 2005.
Turning to radio, OPera believes that the media is in its most difficult position for 15 years, with the top 25 commercial stations losing audiences. The report predicts radio advertising revenues to fall to £587 million in 2006, from £592 million this year, with growth not expected till 2009.
Out-of-home advertising is forecast to continue from its healthy performance this year, with the 6% growth rate seen this year expected to continue through 2006, taking total spend for the sector to £960 million.
Greater interest in poster and billboard advertising amongst advertisers is predicted to be sustained over the next five years, with digital technology adding impetus to out-of-home advertising spend, expected to hit £1 billion in 2007.
OPera forecasts 2006 to be a turbulent year for national newspapers with quality papers that have converted to tabloid or Berliner continuing to do well and The Telegraph coming under increasing pressure to conform.
Overall OPera predicts sales for the quality papers will rise by between 2% and 3% next year, but expects mid-market papers The Express and Daily Mail to suffer a 2% to 3% decline, while red top papers will be hit hardest with a 3.5% decline in circulations across the year.
OPera believes regional newspaper circulations will continue to fall marginally in 2006, but actual readership levels will hold-up as investment in product across the sector pays off.
The report predicts the consumer magazine sector will see more launches, but warns of a potential weakening of the relationship between magazines and their readers.
Finally, looking at the television marketplace, OPera’s study suggests that while TV faces significant challenges going forward, demand for spot advertising will decline only marginally in the mid-term, opportunities beyond spot advertising opening up in the long-term, through looser regulation and greater technological convergence.
Advertising expenditure on television is expected to grow from £3.46bn in 2005 to £3.55bn in 2006 and £3.94bn in 2010. However, TV’s share of display revenues in 2006 is expected to be 39.4% down from 39.9% this year making it 6% lower than it was in 1992.
Looking at ITV, OPera forecasts a substantial loss of revenues for the broadcaster resulting from tumbling audience share and the impact of the Contract Rights Renewal agreement.
The report predicts that ITV1’s overall share of television revenue will drop from 46.82% in 2005 to 43.3% next year in a market expected to grow 2.5%, with ITV1’s potential lost revenue amounting to around £82m in 2006.
OPera: www.omd.com