WPP media arm sees weaker ad spend growth for 2011

GroupM, the parent company of WPP media agency networks, has more than halved its UK ad spend growth forecast for 2011 to 1.5%.

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This is in line with the Advertising Association/Warc quarterly report released earlier this week that revised ad spend growth to 1.4%.

GroupM has chopped its forecast for the UK down from 3.6% and says the UK retails sales slowdown has “put the brake on advertising, at least short-term” and impacted on the economy as a whole.

The report says that 2011 was always expected to be tough after a 9% ad recovery in 2010, boosted by a World Cup. TV ad spend is down from 14 % growth in 2010 to a forecasted 1.1% this year. National newspaper ad spend is forecast to go into reverse, it was up 6% last year and is expected to see a fall of 4.1% in 2011.

However, GroupM says it has three main hopes that it may have given too dismal a forecast for ad growth. There are that the bank rate does not rise, that retail will bounce back in Q4 and that government advertising will return to growth in the new financial year.

Looking ahead, the report forecast 3.3% growth for 2012, in contrast to the AA/Warc prediction of 5.4%. GroupM points to the Olympics and Euro 2012 football tournament as helping boost ad spend.

It adds that the ad cycle follows corporate investment more closely than consumer spending and the conditions for investment are more positive.

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