The British advertising market is growing at an “amazingly strong” rate and is set to overtake Germany to be the world’s fourth largest in a sign that the UK recovery is accelerating.
The media buying agency Zenith Optimedia forecasts that UK ad revenue will soar by £1bn or 7.4 per cent this year to £14.3bn, thanks to the mobile boom – sharply up on its estimate of 5.8 per cent in April.
Zenith is even more bullish about 2015, upgrading its growth forecast to 8.2 per cent, and pencilling in a further 5.9 per cent rise in 2016 to reach £16.4bn.
Advertising is seen as a bellwether of the economy because brands tend to increase ad spending in good times and cut quickly in bad times.
Zenith, whose clients include Aviva, O2 and Royal Bank of Scotland, reckons the UK ad market is growing faster than that of any other major developed economy. Its value should overtake Germany in 2016 in US dollar terms.
Jonathan Barnard, head of forecasting at Zenith, described Britain’s growth as “amazingly strong”.
Worldwide ad revenues should rise 5.4 per cent this year to $524bn (£309bn) as Europe returns to growth, after years of woe in the eurozone. The global forecast is marginally down on Zenith’s April estimate as a lift from the World Cup is offset by the crisis in Ukraine. The market should keep rising by more than 6 per cent in both 2015 and 2016.
Zenith says mobile is “the main driver ”, rising five times faster than “desktop” internet, because of smartphone adoption and the rise of 4G phone networks.
Moray MacLennan, worldwide chief executive of the ad agency M&C Saatchi, said UK advertising was benefiting from London’s role as a global centre for business, media and culture. “London’s right to claim the title ‘capital of the world’ has not been so strong for over 100 years,” he declared. “It has a confidence boarding on swagger, which is reflected in the advertising industry.”
Gerry Human, chief creative officer at Ogilvy & Mather London, said clients are taking a “more confident, less risk-averse approach to advertising”, particularly in fast-growing sectors such as digital entertainment and online.
Ogilvy is also seeing signs that “mainland Europe is recovering rapidly”, said Mr Human, whose agency does a significant amount of international work in London.
Jim Prior, chief executive of the WPP branding agencies The Partners and Lambie-Nairn, said: “Clients care increasingly less about geography these days and will happily engage with the best agency no matter where they happen to be located. London’s key strength is that it has more of the best talent in the world than any other city.”
Matthew Heath, chairman of marketing agency LIDA, said: “We continue to export great ideas and great work.”