It also predicts overall market growth of 3.3% in 2010, up from the previous forecast of 2.3%. Total adspend is now expected to reach £14.98bn in 2010, an increase of £0.5bn from 2009.
Following six consecutive quarters of decline, UK adspend grew by 3.4% in Q1 this year, much faster than previously expected. Most media performed well in the first three months of the year.
Out of home (+14.6%) was the strongest performer year on year, with big gains also registered for TV (+9.8%), internet (+9.2%), radio (+8.7%) and cinema (+3%).
Financial advertising returned to growth (+0.4%) in the first quarter for the first time since Q3 2007, and will continue this positive trend going forward, the report says.
Amid reports suggesting that government cuts will set back the industry, COI advertising spend is expected to be reduced considerably.
The government and charity sector, which accounted for 7.2% of total adspend in 2009, is predicted to register a double-digit decline this year as a result. All other sectors should see growth across 2010 and 2011.
Tim Lefroy, chief executive at the Advertising Association, said: "Despite the doomsday predictions as the government slashes adspend, the industry is in good health. Overall performance is actually outstripping the official forecasts."