TV adspend recovery remains four years off

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.