Olympics fails to rally UK ad budgets

UK ad spend rose by only 0.8 per cent year-on-year in the third quarter of 2012 despite the Olympics, lagging behind global industry growth rates which saw a 4.3 per cent annual increase during the same period, according to separate studies.

Olympics fail to rally UK ad budgets.
Olympics fail to rally UK ad budgets.

The latest quarterly AA/Warc (Advertising Association and Warc) Expenditure Report reveals that UK ad spend hit £4bn in the third quarter of 2012, with the ‘out of home’ category experiencing a 25.4 per cent year-on-year increase in revenues (£270m), the largest increase out of all categories.

The huge increase in ‘out of home’ budgets, the biggest increase since 2000, was attributed to “the Olympic effect” which will further propel total UK ad spend to hit £16.8bn in 2012 according to AA/Warc’s forecast.

The converse of “the Olympic effect” was that TV budgets dropped 7.2 per cent year-on-year during the third quarter to £862.7m as the tournament was broadcast on public service channels (BBC), despite the fact that the Paralympic Games were aired on commercial television (Channel 4).

Other categories to have experienced a decrease in budgets were radio and press but these decreases were by increases in online, cinema and direct mail ad budgets (see chart below) according to the study which collates data from magazine publishers, Ofcom, trade bodies including the IAB and RAB as well as Royal Mail.

AA/Warc Q3 2012 ad spend study

The figures, released today, led AA/Warc to further forecast that total UK ad spend will hit £17.2bn in 2013, compared to the £16.8bn total for 2012.

Tim Lefroy, Advertising Association’s CEO, says: “Despite the shaky economic outlook, 2013 will see overall ad spend return to levels last seen before the recession. That’s good news for both UK advertising and UK plc.”

Suzy Young, Warc’s data editor, adds: “Though expectations have been scaled back in line with the deteriorating economic outlook, we still predict growth of over 3 per cent in 2013.”

Meanwhile, a separate global advertising study from research house Nielsen indicates that the UK lags behind global growth rates in ad spend, finding that total ad spend grew 4.3 per cent yearon-year to hit $139bn in the third quarter of 2012.

Nielsen’s quarterly Global AdView Pulse report, also released today, indicates that the growth was driven mainly by increased budgets in the emerging markets of Latin American as well as the Middle East and African markets, while European ad budgets fell by 3.4 per cent year-on-year.

The overall increase in global ad spend was attributed to the Olympics and a further recovery in ad budgets in North America which grew by 5 per cent year-on-year according to the study.

Randall Beard, global head, advertiser solutions for Nielsen, says: “”Growth in global ad spend accelerated in the third quarter. The Olympics, a major media event in all parts of the world and the US presidential election helped drive investment up.”

Nielsen Global AdView Pulse measures ad spending for TV, newspapers, magazines, radio, outdoor, cinema and internet display advertising.

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