UK ad forecast down to 0.5%

The outlook for the UK advertising industry remains weak, with a new ZenithOptimedia ad spend forecast the latest report to downgrade expectations.

The Publicis-owned agency has predicted UK advertising spend to grow 2.7% to £11.5bn in 2005, down from the 4.9% growth forecast at the beginning of the year and the 2.9% tipped in July.

Adam Smith, head of knowledge management at ZenithOptimedia, said real growth, excluding inflation, was a paltry 0.5%, just clear of an advertising recession.

"The only media to gain share in 2005 were cinema, outdoor and internet," he added.

Outdoor was "bristling with innovation" and benefiting from an increase in inventory, he said, while internet growth was "repeatedly underestimated".

The report follows the latest Bellwether Report from the Institute of Practitioners in Advertising (Media Week, 18 October), which showed that clients' media budgets in the third quarter were 6.5% lower than expected at the start of the year.

Meanwhile, in October, the Advertising Association predicted 2.3%growth for 2005, down from 3.7%predicted in June.

The ZenithOptimedia report blames the dramatic downturn in high street spending as the main cause for the advertising downturn.

Retail was previously the most important advertising category for television, radio, national and regional newspapers, and the second most important for consumer magazines. But, in the year to date, the sector has dropped in relative importance to become the fifth-largest category in TV, the third-largest in radio and the fourth-largest in press overall.

The report forecasts that the "faltering housing market and the prospect of tax rises" are likely to prevent a swift recovery.

ZenithOptimedia expects global advertising expenditure to rise 5.2% in 2005, but the growth mostly stems from regions outside the established markets of North America and Europe.

Brazil, Russia, India and China are collectively set to contribute 27%of world ad growth this year.

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