GroupM Downgrades U.K. Ad Forecasts

LONDON: GroupM has reduced its U.K. advertising forecast for 2011 from a 3.6-percent growth rate to 1.5 percent, following last year’s 8.9 percent recovery.

The firm notes in its downgrade report that real household disposable income today in the U.K. is the same as it was in 2008, as a result of wage deflation and the tax/benefit squeeze. The current estimate is £780 per household in 2011, and this slowdown in retail spending is continuing to pressure on adspend. "The year has proved harder going" than expected, GroupM says. The firm does, however, cite some conditions in which its forecast could be too low: the bank rate staying the same, a Q4 retail recovery and an increase in government advertising.

For 2011, GroupM forecasts total adspend of £12.5 billion, with 3.3 percent growth estimated in 2012 to reach £12.9 billion. Next year, GroupM says, "is a ‘maxi-quadrennial’ providing an Olympic and Euro football updraught, though this is hard to isolate or quantify. Most usefully, the advertising cycle follows wider corporate investment more closely than it does consumer spending, and the conditions and sentiment for investment remain more positive than those for consumers."

Television remains the dominant medium, taking in £3.4 billion last year, a 14.8-percent bump. The forecast for this year is flat (1.1 percent), with a 3.3-percent increase seen in 2012 to reach £3.6 billion.