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UK ad spend forecasts lift on back of soccer World Cup

MUMBAI: Strong performances for TV and radio in Q1 2014 and the improving economic outlook have led Advertising Association/Warc (AA/Warc) to revise its forecasts upwards for the UK ad market.

According to its latest Expenditure Report, growth rates are predicted to reach six per cent in 2014 and seven per cent in 2015.

Advertising Association CEO Tim Lefroy said, “ These latest ad spend data are another nudge-up for the economy, and a feather in the cap of UK global leadership in online and mobile, with consumers getting more value each day.”

The AA/Warc Expenditure Report is a measure of advertising activity in the UK. It positions itself as the only source that uses advertising expenditure gathered from across the entire media landscape, rather than relying solely on estimated or modelled data. With total market and individual media data available quarterly from 1982, it is used by advertisers, agencies, media owners and analysts.

TV and radio to enjoy a welcome boost in Q2 from the soccer World Cup effect. Total UK advertising expenditure increased by five per cent in Q1 2014 to reach £4.4 billion, ahead of the 4.5 per cent growth predicted in April.

Spot TV advertising saw a revenue increase of six per cent in Q1 to reach £1.1 billion. This should accelerate to 10.5 per cent growth in Q2 as TV enjoys a significant boost from the soccer World Cup.

The rate of increase should ease in the third quarter, reflecting the impact of budgets brought forward specifically for the tournament.

On the whole, 2014 is expected to deliver a 6.5 per cent increase compared to 2013.

At-a-glance media summary

Radio (excluding branded content) rose by 5.7 per cent in Q1 2014 vs Q1 2013. Radio is expected to register annual growth of 4.4 per cent in 2014, the sector’s best performance since 2003.

While 2014 has started with a year-on-year drop of 2.2 per cent to £990 m, AA/Warc forecasts overall out-of-home growth of 2.7 per cent for the year, a downgrade of 1.8pp from our April report.

The print ad revenues of national news brands declined more than anticipated in Q1 2014, down 8.3 per cent vis-a-vis 2013, to £286 million. While digital ad spend rose by 19 per cent for the same period to £47 million, it was not sufficient to offset the print drop, with the sector as a whole recording a 5.2 per cent dip. Forecasts have been downgraded for 2014 to -1.9 per cent.

Regional news brands continued to decline in Q1 2014, with ad spend down by 6.8 per cent compared to the same period last year. This represents a 9.7 per cent drop for print (£263 million) and an 18.6 per cent increase for digital revenues (to £39 million). The anticipation is for an overall decline of 7.3 per cent in 2014 in line with 2013.

Magazine brands saw an ad spend dip by 3.8 per cent in Q1 2014, following a 6.5 per cent decline for print (to £172 million) and a 6.3 per cent uptick for digital (to £53 million). The total ad spend is predicted to record a 2.1 per cent decline in 2014.

Cinema ad spend registered slight year-on-year growth of 0.4 per cent in Q1 2014, reaching a value of £36.3 million. Growth is expected to accelerate throughout 2014, notably in Q3 (+10.6 per cent) when buoyed by summer blockbusters.

The anticipation is for overall growth of 6.4 per cent this year.

Internet ad spend grew by 15.6 per cent in 2013, to £6.3 billion. With a growth rate of 95.2 per cent in 2013, mobile is expected to continue to grow rapidly, by 75 per cent in 2014 and 47 per cent in 2015. Total internet ad spend (including mobile) is expected to increase by 14 per cent in 2014.

Direct mail ad spend dropped by 1.4 per cent in Q1 2014. AA/Warc expects marginal growth for the remaining quarters and an overall rise of 0.6 per cent for the year as a whole. New data from the Royal Mail show addressed mail’s advertising revenue reached £1.8 billion in 2013, a year-on-year dip of 1.2 per cent compared to 2012.

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