2010 TYNY UK Forecast Revised Up From -3 Percent to Zero

LONDON—Advertising spending in measured media in the U.K. is expected to fall 12 percent in 2009 compared to the previous year, according to a revised forecast by GroupM, the world’s leading global media investment management operation.

"Our midyear forecast predicted a deeper decline of 14 percent in 2009 U.K. ad spending,” said GroupM Futures Director Adam Smith.  He added that the improved prediction was sparked in large part by increased fourth quarter ad spending.

The revised forecast, part of a series of ongoing GroupM reports called “This Year, Next Year,” also predicted that ad spending in 2010 would be the same as 2009, another small improvement.

“Both 2009 and 2010 are looking slightly better than we imagined six months ago,” said Smith, who oversees all of GroupM’s “This Year, Next Year” reports.  “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.”

“This Year, Next Year” is part of GroupM's media and marketing forecasting series drawn from data supplied by holding company WPP's worldwide resources in advertising, public relations, market research, and specialist communications.

Marketers are expected to maintain ad investment going into 2010 despite uncertain consumer demand and continuing 'procurement' pressure to get more marketing for less money, Smith said, adding that the prediction presents a paradox that can be explained.

“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 said higher fourth quarter ad spending was influenced by normal seasonal advertising, the released of previously frozen ad dollars, and a reflection that the true onset of the current recession began in the fourth quarter of 2008.

Genuine ad spending growth will require a recovery of advertiser demand in the most stricken sectors: financial services, automotive, and food, of which there is no real sign yet, the report revealed. Between January and September the three categories comprised 22 percent of the ad market, but provided 36 percent of the year-on-year fall in ad revenue volume. 

The U.K. was among the first into ad recession and it could be among the first out, Smith predicted. Zero growth in 2010 would still place the U.K. ahead of the major European ad markets, all of which remain single-digit-negative in 2010 in a new global GroupM ad forecast scheduled to be released December 8.  Tempering exuberance, GroupM’s new, longer-range ad model predicts the U.K. will return to substantial (5 percent-plus) ad growth only in 2012.

For further information about the report (price £200 or available as part of our online service, GroupM Oracle) please contact Adam Smith at adam.smith@groupm.com, 020 7969 4083.