NEWS4 August 2011

Economic fears to flatten 2011 ad spend growth, Warc predicts


UK— Real-terms growth in advertising spend is set to be flat this year as a result of “growing uncertainty about the global economy”, according to ad research body Warc.


The organisation has revised down its prediction for ad spend growth this year from 4.6% to 3.2%, which, when adjusted for the effect of inflation, means a decline of 0.1%.

The organisation said businesses in the twelve major economies that it looks at “have adopted a more cautious, short-term approach to ad spend” since it published its last forecast in March.

The IPA’s latest quarterly Bellwether Report on UK marketing budgets painted a similar picture, with spending down for the third quarter in a row.

Confidence has been hit by concerns about the impact of government debts in the US and Europe, as well as rising inflation rates, Warc said. It expects next year to bring a “partial recovery”, with growth of 5.7%, or 3.1% when adjusted for inflation.

Suzy Young, data editor of Warc, said: “Global economic conditions remain unsettled and this is making marketers cautious, particularly in Western Europe, Japan and the US. As a consequence, marketing budgets for 2011 are likely to be smaller than initially hoped. The next three months will be crucial.”

Growth is expected to be strongest in Russia, India and China, with Japan and Italy set for record declines as a result of the Japanese earthquake and concerns over the Italian national debt.

The US is expected to remain the largest market, accounting for $147bn of spending.