Revenues for TV and regional papers will 'level out in 2007'

Television and regional newspapers, two of the advertising sectors to suffer most in 2006, are set for improved performances in 2007, according to WPP's pooled buying operation, Group M.

Ad revenues for TV are predicted to drop 2.4% this year, claims Group M. But they should then level out in 2007.

Adam Smith, futures director at Group M, blamed the poor result for 2006 on ITV's disappointing results, which contributed to the imminent departure of chief executive Charles Allen.

Smith commented: "2006 has proved to be an extraordinarily poor year, especially for TV and regional newspapers.

"Next year will not be so bad, as the rates of deterioration will arrest slightly."

Smith added that there would be a "re-evaluation of the TV medium" because it was becoming cheaper to advertise to an ITV audience.

Group M's research predicts that it will cost £6.75 to reach on average per thousand viewers in 2007. This compares with a figure of £7.56 in 2002.

The advertising medium that has suffered more than television in 2006, is regional newspapers.

Group M has forecast a drop of 6.6% this year, but expects that to almost level out in 2007, with only a 1.5% decrease.

"Classified is two-thirds of regional ad revenues, but it is 90% of the current problem," Smith added.

He blamed the rapid migration of the classified market to online and a stagnant car classified market.

But Smith also described the results for 2006 as "exceptional" and forecast that they were unlikely to be maintained in 2007.

"The economy remains in reasonable shape and we are not predicting recession," he said.

Rather, the growth of internet advertising means UK advertising media revenue is set to pass £12bn for the first time this year.

"The overall sustainable growth rate is four per cent and I see no reason to discount that next year," Smith explained.

The report from Group M draws upon data from WPP agencies MindShare, Mediaedge:cia and MediaCom.

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