Advertising Spend Collapses as Economy Grinds to a Halt

By Clark, Nick | The Independent (London, England), March 17, 2009 | Go to article overview
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Advertising Spend Collapses as Economy Grinds to a Halt


Clark, Nick, The Independent (London, England)


Ad revenues fall by a tenth in the last quarter of 2008, with more declines expected

An unprecedented plunge in advertising in the UK saw spending fall by almost a tenth in the final three months of last year, new figures revealed yesterday, with the economic crisis set to prompt even steeper falls in 2009.

The total spent on advertising in the UK in 2008 was down by 3.9 per cent on 2007, according to figures compiled by the World Advertising Research Center (WARC) on behalf of the Advertising Association. But the research reveals an astonishing increase in the rate of decline in the final quarter of the year, when spending was 9.6 per cent lower than in the same period of the previous year.

Colin Macleod, research director at WARC, said: The fourth quarter was the worst of the year, and was tied in with the arrival of the recession. It was a sharp turnaround. The quarter is comparable to the levels seen in the economic downturn of 1991.

He warned that spending would fall further, but offered some hope to the beleaguered industry. There is a feeling that advertising spending will go down quite sharply again, although it should pick up by the end of the year.

Sir Martin Sorrell, chief executive of the advertising agency WPP, said the numbers were likely to be repeated over the next few months. The first half of 2009 will be very difficult around the world, he warned. There will be some recovery in the second half in relation to the first, and it should then get better in 2010. Sir Martin named the US and western Europe as the toughest markets for advertising in the current environment.

WARC said the decline in the UK had accelerated throughout the year. In the UK, the amount of money spent, especially on display and classified advertising, tends to be driven by changes in consumer expenditure as well as the levels of corporate profitability, Mr Macleod said. Both of those have been hit and that will bring spending down right across the industry.

The research reveals that spending is falling faster on newspaper advertising than any other category, down 12 per cent in 2008 over the previous year.

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