Ad spend growth to slow to 2.9% in 2011

Growth in spending on advertising will slow to 2.9% this year as marketers rein in outlay over fears about the state of the economy, according to a study.

The latest Advertising Association/WARC Expenditure Report confirmed that total spend on advertising expenditure grew by 6.9% in 2010 to reach £15.5bn despite low single digit economic growth.

The biggest boost to the ad spend figures came in the final quarter of 2010, the report adds, with TV and direct mail seeing the biggest increase in spend, 12% and 12.7% over the final three months of the year respectively. Online ad spend grew by 10.9%.

TV was the fastest growing medium – spend increased by 15.8% in 2010 – in line with the performance of the UK’s biggest commercial broadcaster ITV, which recently reported that ad revenue increased by 16% last year. TV ad spend had dropped by over 10% in 2009, according to AA/WARC.

Despite a strong showing in 2010, the report forecasts growth will slip to 2.9% this year before rising to 5.5% in 2012 on the back of increased activity around the 2012 Olympic Games.

Forecasts of slower growth this year and next follow the Chancellor’s prediction in yesterday’s (23 March) budget that the UK economy is to grow at a slower rate in 2011 than previously thought.

Tim Lefroy, chief executive of the Advertising Association, says: “These are good news figures, not just for the advertising sector itself, but for UK business more widely. Rising ad spend reflects investment in sales by business, growth in media and content and, ultimately, signals a competitive, healthy UK economy.”

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