Advertising spending soars in new boost for economy

 

The British advertising market has bounced back to levels last seen before the 2007 credit crunch and is on course to keep growing strongly this year and next, boosting hopes that the UK economy is on the mend.

Total ad expenditure on everything from the internet to billboard posters is forecast to rise 2.7 per cent in 2013 and a punchy 5 per cent in 2014 — well ahead  of inflation.

Figures from the Advertising  Association and trade body Warc showed online and video on demand (VoD) are driving growth, but traditional media such as TV and national newspapers are also resurgent “driven partly by a strengthening economy”.

The City welcomed the authoritative AA survey because marketing spend is widely seen as an early indicator for the wider economy. Companies tend to cut back quickly when they fear a downturn and increase spend if the outlook is good.

“Advertising does not just track GDP, it drives it,” said AA chief executive Tim Lefroy. “The return to pre-recession levels of spending will have an impact not just on adland but the economy at large.”

The AA and Warc said the UK ad market climbed 2.3 per cent to £17.17 billion in 2012 as the Olympics and the Queen’s Diamond Jubilee gave a lift — although that rise was not as much as some experts had predicted.

The internet has been the single most dominant medium for several years and climbed to £5.42 billion after a 13 per cent surge, while TV was little better than flat at £4.48 billion.

Last year’s overall performance was the best since 2007 when expenditure peaked at £17.36 billion, and the survey suggests the market should easily beat that mark in the coming years.

Internet ad spend will again be the best performer, up 10 per cent in 2013 and a predicted 9 per cent in 2014. VoD should leap by a third next year as consumers embrace mobile viewing, helping to send total TV ad spend up 6.9 per cent.

The rise of digital should also help national newspaper brands to bring in an extra 2.7 per cent in ad revenue in 2014, as growth in online and tablet advertising more than offsets any declines  in print.

Rufus Olins, chief executive of  Newsworks, which represents the newspaper industry, said it showed successful print titles were evolving into “multi-platform brands”.

Analyst Giasone Salati from Espirito Santo bank said there was “a lot of optimism about the UK” compared with Western Europe, which has been in decline.

But he sounded a note of caution because wider GDP growth has been anaemic, up only 0.3 per cent in the last  quarter. “Looking at the combination of where GDP forecasts are going and how relatively high business  confidence is, we think the UK ad  market could disappoint on the downside,” he warned.

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