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Adspend down in third quarter as press suffers severe decline

LONDON - Advertising expenditure fell by 2.3% in real terms in the third quarter of 2005 compared with the same period last year, despite a 46.5% year-on-year rise in digital spend, according to research published by the Advertising Association.

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However, without taking inflation into account, UK spend totalled £3.8bn, a year-on-year increase of 0.1% across all media.

While in real terms TV advertising experienced a modest 0.8% hike and outdoor increased by 1.6%, internet advertising continued to demonstrate its massive capacity for growth. Expenditure increased by 46.5% to £266m.

This follows ZenithOptimedia last week singling out the internet as a driver of increased adspend. It said the internet will take 4.6% of advertising spend this year, rising to 6.4% in 2008. From 2005 to 2008, the internet is expected to create $15.8bn (£8.9bn) worth of new adspend.

Conversely, press advertising suffered the most severe decline. Classified advertising plummeted 9.6% to £768m, national newspaper spend decreased 8.4% to £420m and regional newspaper spend fell 9.2% to £718m.

Consumer magazines fared better, but were still hit hard by tightening budgets, with overall expenditure falling 2% to £194m.

Direct mail also suffered a decline, falling 8.2% to £535m.

The AA research was compiled in conjunction with WARC.

Despite the bad news, there were better tidings last week when the AA said that advertising growth is expected to bounce back next year in the UK and hit a peak in 2009. The figures predicted that, over the next 12 years, adspend could grow by as much as 43% to £23bn, in the absence of major threats. Even the most conservative forecast by the AA previously had growth between 2005 and 2017 at 37%. 

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