ZenithOptimedia: British Ad Market to Begin Growing Again in ‘08

LONDON, July 30: A new report from ZenithOptimedia predicts
that television advertising will stabilize in the U.K. this year and is set to
begin growing again in 2008, albeit at a modest 2 percent per year.

The latest edition of ZenithOptimedia’s UK Television
Forecasts to 2012 predicts that the
television ad market will stop shrinking this year and will begin picking up
next year, but only at a growth of 1 percent to 2 percent per year until 2012.
Furthermore, TV’s share of the ad market will decline from 27.2 percent in 2006
to 22.7 percent in 2012.

ZenithOptimedia says that 88 percent of British homes will
receive digital television by the end of this year, reaching 100 percent by
2010, two years before the analogue switch-off date in 2012.

The report also looks at how digital channels from key
British broadcasters are impacting their overall ad revenues. ZenithOptimedia
projects that E4, More4 and Film4 should more than make up for a 2 percent
decline in Channel 4’s revenues in 2007; ad revenues received by the whole
group are expected to grow by 1 percent. Five Life and Five US should do the
same for Five, turning a 3-percent drop in revenue at the main channel to a 2
percent increase for the group as a whole. ITV’s four digital channels are not
growing fast enough to make up for ITV1’s decline: ITV1’s ad revenues are
expected to shrink by 7 percent in 2007, and revenues across all ITV-branded
channels are predicted to shrink by 4 percent.

The report goes on to note that in 2006 the average adult
CPT [cost per transaction] was at its lowest since 1995, and 19 percent lower
than it was at its 2000 peak. After adjusting for inflation, airtime is now at
its cheapest since the early 1980s. Prices fell by 6.5 percent in 2006 and the
report expects them to fall another 1.4 percent in 2007, at which point they
should stabilize.