GroupM sounds caution over traditional media's recovery

LONDON - UK ad spend on traditional media is set to plateau after a dismal 2006 as growth in online media slows, according to the latest forecast from WPP's GroupM.

Traditional media will see a 1% drop in revenue in 2007 and something close to 0% in 2008, as the likes of Channel 4 and News International evolve into multimedia "hubs", pushing their presence online.
But GroupM futures director Adam Smith warned: "Traditional media revenue has not quite stopped falling. We should beware of taking too much comfort in the data; absence of growth is never a good thing."
GroupM has forecast 2.6% growth in total UK ad spend in 2007 and 3.1% growth the following year, a conservative estimate compared to Carat's expected 4.1% growth in 2007 and 3.9% growth in 2008.
However, traditional media will continue to underperform the overall economy indefinitely unless it becomes more accountable, and productive, GroupM said.
The group believes internet revenue growth will slow from 47.5% in 2006 to 34.2% in 2007 and 30.4% in 2008 as broadband installation and hours online reach saturation point.  
TV revenue has bounced back from a 4% drop last year to an estimated 0.5% drop in 2007 and a 0.2% drop in 2008, as digitisation drives viewers to commercial TV. GroupM's forecast mirrors ZenithOptimedia's latest predictions that TV ad spend will even out across 2007, reflecting a 3.6% growth in the third quarter and a 1% decline in the fourth.

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