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UK adspend drops back but it could be worse (and probably will be)

Adspend levels in the UK declined for the first time in more than a year during the second quarter of 2011, according to the latest Advertising Association/Warc Expenditure Report.

Ad revenues fell by 1.1 per cent year on year in the April to June period, at current prices.

In the current dire economic circumstances this is quite a robust performance as revenues in the second quarter of 2010 delivered spectacular growth of 11.9 per cent as it looked as though the UK was recovering strongly from recession.

Warc’s data editor Suzy Young (pictured) says: “While adspend did contract year-on-year in the latest quarter, it’s worth remembering that Q2 2010 yielded a particularly strong result, making comparisons particularly unfavourable.”

More specifically, television ad sales dropped by 2.2 per cent in the second quarter of 2011 and press saw a 7.7 per cent decrease, offsetting gains of 7.3 per cent for radio, 6.4 per cent for the web and two per for direct mail.

Looking ahead, the Expenditure Report predicted the UK ad market will rebound in the second half of 2011, as returns climb by 1.3 per cent and 1.7 per cent in the third and fourth quarters respectively.

The Warc full-year forecast has been downgraded, with annual growth now pegged at 0.9 per cent, measured against an expansion of 1.4 per cent outlined in the last such study, published in June.

In the longer the Expenditure Report projects that ad revenues will increase by 4.6 per cent in 2012, against a previous estimate of 5.4 per cent, due in large part to the anticipated impact of the London Olympics.

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AA CEO Tim Lefroy says: “Advertising is particularly prone to the bigger economic picture and while times remain tough, there are some grounds for optimism as we move towards 2012.”

In terms of individual industry ad budgets the report expects retailers and government to decline this year and resume growth next while all other sectors are forecast to show modest growth in both years.

The point about forecasts, of course, is they’re disappointingly easy to revive and, usually, revive downwards.

It’s pretty clear that UK ad expenditure is poised at the edge of a rather nasty cliff and it would only take a few big advertisers to start hoarding their cash (not that they’re especially hard up at the moment) for a decline to begin that even the Olympics might struggle to avert.

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