UK ad spend drops for first time in two years

Advertising spend declined in the second quarter, its first quarterly decline since 2009, as marketing directors reined in spending because of uncertainty about the state of the economy, according to a study.

The Advertising Association/Warc Expenditure Report claims that spend in the second quarter dropped 1.1% due to weaker revenues year on year from TV, which was down 2.2%, and press, down 7.7%. Growth was stronger in radio, which marked a 7.3% uplift and online, which grew by 6.4%.

UK ad spend for the entire year has now been downgraded to grow by just 0.9%, compared to the previous forecast of 1.4%.

All media apart from radio and direct mail are expected to decline in terms of ad spend for 2011.

The Advertising Association and Warc predict that ad spend will return to brighter growth in 2012, estimated at 4.6% year on year, drive by the London Olympics. This number has also been downgraded, from 5.4% in the previous quarter, in light of the worsening economic outlook.

The International Monetary Fund cut its growth forecast for the UK for 2011 from 1.5% to 1.1% today (21 September), saying the global economy had entered a “dangerous new phase”.

Consumer confidence slipped to a four month low in August, as the economy failed to show signs of recovery and following the riots in English cities the previous, according to the Nationwide Index.

Tim Lefroy, chief executive at the Advertising Association, says: “Advertising is particularly prone to the bigger economic picture and while times remain tough, there are some grounds for optimism as we move towards 2012.”

The figures were collated in the Advertising Association/Warc Expenditure Report, which has reviewed advertising spend on all major UK media on a quarterly basis since 1982.

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