Advertising faces slow recovery

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The Independent Online
THE RECESSION has had a devastating impact on advertising expenditure. It has collapsed far more dramatically than overall consumer spending in the past three years, according to the UK Media Yearbook published by Zenith, part of the Saatchi & Saatchi group.

The yearbook says that overall spending on all categories of advertising, currently worth about pounds 8.5bn a year, is expected to rise in real terms by only 1 per cent this year following a 10 per cent real fall in 1991 and a 6 per cent fall in 1990.

It predicts a 2.7 per cent improvement in 1993, somewhat better than the forecast 1 per cent rise in gross domestic product. 'As the economy recovers weakly through to the end of 1993 we expect the advertising sector to rise marginally ahead of GDP,' it says.

Between 1981 and 1989 total advertising spending was growing at a buoyant 6.4 per cent a year, helping to fund the wide variety of new publications, newspapers and ITV drama.

The report cautions that not all areas of the media will recover in a uniform manner. The national and regional press had a particularly bad year in 1991, when advertising fell 10 per cent in real terms. Business and professional magazines were down 15 per cent, and classified small adverts dropped by 30 per cent. Consumer magazines advertising dropped 13 per cent. Zenith says 1992 growth is expected to be below average, at 0.2 per cent, rising to 2.7 per cent next year.

Television is starting a faster recovery, with growth of 2 per cent this year followed by a predicted 3 per cent next year, above the average.

In contrast, radio is facing rapid expansion from the launch of new channels such as Classic FM but is predicted to have 0.9 per cent growth in advertising this year, followed by 2.8 per cent next year. In 1991 it was shaken by an 8.6 per cent fall in advertising.

Zenith says that the national newspaper market is fully saturated, with very little room for new titles. Existing papers will be forced to compete with each other for readers.

Meanwhile, magazines have been increasing their cover prices to make up the gap created by a drop in advertising. Cover price now accounts for 55 per cent of the revenue generated by a magazine.

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