UK adspend growth reliant on digital investment

UK adspend will grow by 4.1% this year and 3.9% in 2008, with digital investment almost entirely responsible for the growth, according to a forecast by media agency Carat, while a separate forecast by Universal McCann points to a poor outlook in the US market.

The forecast growth of UK adspend in 2007 is a marked improvement on actual growth of 1.4% in 2006. Carat said digital investment continues to be the single biggest driver of adspend growth in every region and country, but it singled out the UK as one of the most sophisticated online advertising economies, with display accounting for only one quarter of total investment.

Total expenditure on TV advertising is likely to remain flat throughout the year. In published media, national newspapers are expected to decline by 2%-3% in advertising revenues over the year.

Within magazines, weeklies are currently outperforming monthly titles and a good release schedule will support moderate growth in cinema.

Mainardo de Nardis, CEO of Aegis Media, said: "Looking beyond individual country trends, the global picture is one of healthy growth. At 5.8% this year and 6.4% next, global adspend is comfortably outgrowing world GDP.

"But while digital continues to outpace all other media in every corner of the world, rumours of the death of so-called 'old media' are exaggerated. In some parts of the world, demand remains vibrant. At the same time, we are watching a variety of new hardware, formats and services with interest."

In a separate US-focused forecast by Universal McCann, US adspend is predicted to grow a mere 3.1% to $290.3bn (£145.6bn) this year.

"The outlook for advertising this year is not very good," Robert J Coen, senior vice-president and director of forecasting at Universal McCann, said in presenting the media buying agency network's Advertising and Media Outlook Mid-Year Update.

Coen said big business has been cutting every expense it can as it focuses on improved productivity and profit growth.

Online advertising and search marketing have "violently" impacted established media such as TV and press as the popularity of marketing tactics that produce consumer transactions grow.

But international adspend is growing faster than US adspend this year, according to the report.

Looking forward to 2008, US adspend is expected to increase 5% next year to $305bn, while overseas adspend is projected to increase 5.8% to $360bn.

Coen said: "We expect very little real growth in US advertising in 2007 with a gain of only 3.1% for a projected total of $290.3bn.

"Overseas ad growth, in local currencies, is expected to do better than the US in 2007, with growth of 5.2% to $339.8bn. Combined total worldwide advertising is now expected to increase 4.2% to $630.1bn this year, assuming no change in exchange rates."

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