Television's share of UK advertising spend is not expected to
recover to the peak levels hit in 1999 within the next four years,
according to the latest research from the media planning and buying
agency OMD UK.
Having hit a high of 43.6 per cent in 1999, TV's share of the total
advertising expenditure dropped to 42.5 per cent in 2000 and has slumped
even further to an estimated low of 40.6 per cent this year.
And TV advertising spend is predicted to fall to £3.1 billion by
the end of 2001 from £3.3 billion in 2000, according to a recent
report from Zenith Media.
Mark Palmer, the managing partner at OMD, said: "This is our forecast
based on numerical analysis. A lot depends on what the TV market does
with its product and its brand. It can no longer afford to be
ITV has been particularly hard hit and OMD estimates that its revenue
will be down by 13.5 per cent year on year in 2001/2000. The TV buying
director at OMD, Jonathan Allan, said: "To put this decline into
perspective, the last recession in 1990 saw zero growth and 1991 fell
only 1.6 per cent year on year. To say this fall is 'off-trend' is to
put it mildly."
TV's share of the total advertising spend is expected to start creeping
up in 2002 to 41 per cent, reaching 1993 levels at 42.2 per cent by
2005, according to OMD.
Allan said: "Television's share of total advertising expenditure has
been increasing. This growth, within a growing sector, has automatically
led to inflation ahead of the RPI (retail price index) and of other
media. The problem was compounded across the first half of 2000 by the
technology/dotcom boom and has perhaps pushed advertisers into other
media, evidenced by the fall in share in 2000/2001 down to 1991
The good news for advertisers is that this has reduced the cost of TV
advertising compared with other media.
Allan added: "We expect advertisers to slowly realise the value
available in the marketplace versus the alternatives and redistribute
expenditure accordingly. This will be aided by the improving flexibility
and returns generated when interactive television finally comes of
Total advertising spend is being affected by a marked slowdown in the
global economy that has reduced profits.
Allan pointed out that economic growth and adspend are closely
"However, advertising spend tends to be more volatile and pre-empts
actual economic events - in essence, the advertising sector is the first
to go into recession and usually the first to come out. This is despite
much theoretical and empirical evidence that maintaining adspend through
a recession can improve long-term business prospects," he said.
OMD anticipates that the UK ad industry will undergo a slow, below trend
recovery of 3 per cent growth on 2001's total adspend figure of £9.6 billion.