UK adspend growth reliant on digital investment

by Darren Davidson, Brand Republic 27-Jun-07, 09:20

LONDON - 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 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 agency network's 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.

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."

Comments

DECLAN GANE - 27/06/2007

Of all other media at brand owners’ fingertips, it is event marketing that is not suffering ill effects from the digital revolution. In fact the evidence shows that the events sector is being thrown to the fore of brand campaigns, in part because of its symbiotic relationship with online. The second coming of digital media has taken the form of a tsunami, sucking the traditional mass media sectors under its pull. This isn’t just because today’s consumer wants to “consume” what they want, when it suits, but also because TV, radio, magazines, et al, can all be replicated online. Ironically, it is event marketing, the oldest kid on the block that is riding the digital wave. It’s not just that event marketing is complementary to digital, but that the two have so much in common, to the exclusion of the traditional mass-market media. The key characteristic of both digital and events is “pull” rather than “push” media. Unlike the interruptive push techniques of broadcast, direct mail and other media forms, pull, or permission marketing, is exclusive to digital and live marketing formats. In 2007 “engagement” has taken “centre stage” for marketers and brand managers in our increasingly fragmented world, where consumers need to be able to make sense of the messages they are bombarded with. Taking a brand into a live, face-to-face environment allows the consumer to build a relationship with that brand beyond what is achievable online, or in any other media form. Where communities and relationships can be built online they can be consummated face-to-face. So, event marketing, which for so long has not even been regarded as a mainstream marketing medium, now joins digital on the stage as a “now media” star. Declan Gane www.eventsindustryalliance.com