GroupM warns of 10% ad spend drop in traditional media

LONDON - Ad spend in traditional media is expected to fall 10% in the UK this year, the worst performance in 17 years and the biggest drop of any developed country in 2008, according to a GroupM report published today.

Ad spend: GroupM warns of 10% drop in traditional media spend
Ad spend: GroupM warns of 10% drop in traditional media spend

Forecasts in "This Year, Next Year" from WPP's group buying arm also warns the media industry that worse is yet to come, with a further 9% fall expected for traditional media in 2009.

The outlook makes particularly grim reading for regional newspapers, expected to see revenues plummet 19.1% in 2008 and a further 13.2% in 2009. The sector's staple, print classified ads, continues to migrate online and generally dry up as demand for workers, homes and cars drops.

Despite this, GroupM does not expect to see mass closures within the 1,300 free and paid-for regional titles, as publisher margins have not collapsed. The report predicts closures might be confined to the weakest 2%, or some 26 newspapers.

Elsewhere, there are mostly revenue drops forecast across the media for 2008 and 2009, with TV down 5.8% and 6%, national newspapers down 8.2% and 11.6%; radio down 9% and 8%; consumer magazines down 7.6% and 8.5% and B2B magazines down 8% and 14%.

Advertising on the internet continues to buck the trend, with 19.1% growth forecast in 2008, enough to raise total UK advertising spend to a 3% fall year on year.

However, GroupM has revised its growth forecasts for internet ad spend in 2009, down from 20% to just 3.7%. While paid search sector is believed to be resilient to the downturn due to its accountability, display ad spend is tipped to remain static next year due to falling prices and the loss of many financial advertisers.

"Past recessions have lasted one or two years. This one feels like a two, and we are evidently some way from the bottom," warned Adam Smith, futures director at GroupM. "Any sign of recovery in 2009 would be a nice surprise."

Among the larger countries also shrinking in 2008, media spend in Japan is forecast to drop 6%, Spain 14%, and Germany and Italy both 1%. GroupM is releasing its full global report on Monday (8 December). 

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