A healthy rise in online and mobile advertising revenue in 2012 and 2013 will more than compensate for the steep losses facing the traditional publishing sector, predicts a new report by Media buying network GroupM.
The group, which calls itself "the world's number one media investment management operation," estimates that Britain's overall advertising market will grow sluggishly this year and next, with only moderate help from the London Olympic Games.
Digital high jump
The UK is recognized as a world leader in digital ad spending as a percent of total media, and the upward trend looks set to continue into 2013, according to GroupM futures director Adam Smith. “Digital spending growth already represents a quarter of the entire UK marketing economy, and it continues to grow,” he said on the GroupM website.
The report predicts that digital advertising spending will jump by 11 percent between this year and next, surpassing £5.3 billion ($8.3 billion) by the end of 2012, and reaching £6 billion ($9.4 billion) in 2013.
The sharpest rise is expected in digital communications platforms. “Smartphone proliferation has suddenly made mobile search an urgent priority, while bestowing long-awaited targeting intelligence at scale. Mobile devices are also fuelling second-screen usage, which is another digital revolution in the making: versatile, universal and ergonomic,” according to Smith.
These optimistic predictions follow last year’s positive results: in April, a study from the Internet Advertising Bureau (IAB) showed that UK Internet advertising had increased by 14.4 percent in 2011— the biggest jump in five years.
“Britain has led the way in terms of moving advertising money from traditional areas of spending like newspapers and radio to the internet due to the high level of internet access and the proliferation of smartphones which allow users to access the internet on the go,” Reuters reported in April.
Revenue from print advertising in Britain's regional and national newspapers, on the other hand, is expected to continue its nosedive this year and next. The UK’s regional newspaper market, once an “all-powerful sector” in the words of the Guardian, is expected to earn less than its national counterpart for the first time this year.
Regional newspaper ad revenue in the UK is predicted to decline 11 percent in 2012, which reflects a pessimistic revision of expectations: in December 2011, the forecasted fall was only 7.8 percent. Between 2012 and 2013, it is expected to fall again from £1 billion ($1.6 billion) to £971 million ($1.5 billion), says the report.
Meanwhile, ad revenue for national newspapers is forecasted to fall by 6.3 percent in 2012, more than twice the 3 percent that was initially predicted, reported the Guardian. Another 5 percent drop, from £1.2 billion ($1.9 billion) to £1.1billion ($1.7 billion), is expected between 2012 and 2013.
Overall, measured UK advertising spending is expected to increase by 3.4 percent in 2012 – up from a forecasted 3 percent in December.
Total measured spending is predicted to reach £13.2 billion ($20.6 billion) in 2012, up from £12.7 billion ($19.9 billion) in 2011.
In 2013 it is expected to rise another 3.2 percent to £13.6 billion ($21.3 billion).
Modest as these growth figures may appear, Smith called them robust compared to the rest of Western Europe: “According to our forthcoming global forecasts, the U.K. is leading media growth among the larger western European countries,” he says. “Germany and France are barely positive in 2012 while Italy and Spain are expected to contract about 8 percent.”
“With every source of final demand growth stalled—consumer, government, corporate fixed investment and foreign—U.K. advertising investment remains at maintenance levels, lagging even nominal GDP growth,” said Smith.
Image Credit: Marmite's special-edition Ma'amite jar and print ad, in celebration of Queen Elizabeth II's Diamond Jubilee, via AdWeek