Upturn in ad spending bodes well for Britain
Thursday 17 October 2013
Advertising spend grew at the fastest rate in Britain for 13 years in the last quarter, fuelling speculation that the economy could be recovering faster than some City forcasters expect.
The Institute of Practitioners in Advertising's (IPA) quarterly Bellwether Survey showed a large majority of firms hiking their marketing budgets, with a net balance of 12.3 per cent increasing spend against 7.3 per cent in the previous quarter.
The 300 marketers at leading British companies who were surveyed also said their confidence about their own firm's financial prospects had grown to its highest in eight-and-a-half years.
The news will be a boost to Chancellor George Osborne, as it is a further sign that confidence has returned to levels seen before the collapse of Lehman Brothers and Northern Rock in 2007-8.
The IPA's director general, Paul Bainsfair, said the survey, which was showing the best growth since its inception in 2000, "indicates that companies are beginning to move forward away from the recession and that the UK economy is on the rise again".
He added: "This... will send a continued upbeat message to the advertising industry and the wider economy."
Quarterly results from two of the world's largest advertising groups backed up the IPA's findings.
France's Publicis, which owns top agencies Saatchi & Saatchi, Bartle Bogle Hegarty and Starcom MediaVest, yesterday reported 7.1 per cent sales growth in the UK. Its clients include Google and telecom giant EE.
A day earlier, America's Omnicom, owner of Adam & Eve/DDB and Abbott Mead Vickers, said it saw a 7.5 per cent revenue rise in Britain during the quarter, thanks to clients such as John Lewis and BT.
There are other signs that the UK ad market is performing strongly. Stephen Quinn, the publisher of British Vogue, said the high-end glossy magazine had its "highest ad volume since September 2008" in its latest issue, with its combined print and digital circulation climbing 9 per cent to 235,000.
"We are seeing growing optimism among advertisers, especially towards top premium brands like Vogue," he said.
Sir Martin Sorrell, the chief executive of the British advertising giant WPP, also told this week's Technology Innovators' Forum that his next quarterly results will be "strong".
The IPA survey found internet spend was again the fastest growth sector, but so-called "main media", including TV and press, was also up, with the best growth since the third quarter of 2010.
Chris Williamson, the chief economist at Markit, the research firm that compiles the Bellwether report, said: "The fact that business are starting to spend in earnest again suggests we may finally see a long-awaited upturn in investment spending, which will help take the UK's recovery onto a more sustainable footing."
The British ad market last year bounced back to levels last seen in 2007 before the credit crunch, climbing 2.3 per cent to £17.17bn, according to figures released by the Advertising Association and trade body Warc, and is set to surpass that this year.
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