Progress remains slow and steady after one month’s trading in 2011, with ZenithOptimedia forecasting 3% growth for the media sector this year.
Last year, a resurgent TV sector enjoyed double-digit growth - but there is the constant reminder that these green shoots follow a horrific 2009.
And with the outlook for 2011 far from assured, last month’s Bellwether report revealed marketing budgets fell 5.4% in Q4 2010, as clients remain cautious about the recovery of their bottom line.
But this year’s marketing budgets have been set at higher levels in real terms than in 2010, and media analysts are confident a double-dip recession has been avoided. Numis Securities’ forecast for 2011 uses a comparison of the 2002 to 2003 downturn to draw out a pattern of recovery, which suggests a return to steady growth.
The 4 January VAT increase to 20% appears to have had a limited impact on consumer confidence so far, although concerns remain that inflation will create an increase in interest rates, which will prompt consumers to rein back spending.
The reality of the public sector spending cuts, which will make themselves felt from April, is another, as yet unquantifiable, threat to consumer confidence. There are no major sporting events to galvanise the nation in 2011, although the Royal Wedding is expected to create a spike for retail advertising and the countdown to the London 2012 Olympics will begin in earnest in the fourth quarter of the year.
Television
2010 spend: £3.96bn
Yr/yr percentage change: 18%
The TV ad market grew by between 14% and 18% in 2010, based on industry calculations, giving the medium its best year of ad spend growth since 1988.
The success of last year creates a tough comparable for 2011, which is forecast for more conservative growth of between 3% and 6%, although the majority of industry observers err on the more bullish side.
Last year’s exciting double-digit growth was driven by a return to natural spending levels and increased confidence after marketers slashed spend so viciously in 2009. Numis Securities believes the strength of the rebound in the TV market suggests free-to-air broadcasting is more "structurally secure" than previously thought.
Early reports indicate January and February have got off to a good start, despite the increase in VAT. Duncan Wynne, head of trading at Sky Media, believes the prospect of an increase in interest rates, driven by inflation, are more likely than the VAT hike to impact on consumer confidence and, in turn, advertising spend.
Chris Locke, UK trading director at VivaKi, predicts Q2 will struggle - partly due to World Cup comparables - but that the launch of the Sky Atlantic channel on 1 February and the return of The X Factor will boost the market.
He anticipates Q4 will benefit from the Rugby World Cup and from seasonal spend, increasingly from online retailers.
Internet/social media
Spend for December 2009 to November 2010: £460m
Yr/yr percentage change: N/A
The internet will continue its strong forward march in 2011. Agencies and online media owners predict growth of between 7% and 9% this year, capitalising on the sector’s 10% growth in 2010 (source: Internet Advertising Bureau).
Guy Phillipson, chief executive of the IAB, says last year’s growth was driven by display advertising, including video, social media and the mobile internet.
Social media, mobile and video are expected to remain the fastest-growing sectors in 2011, and these are expected to drive an increase in brand advertising, which, although increasing, is still considered to have room for growth.
Stephen Haines, commercial director at Facebook, says there will also be a shift in how brands use social media platforms over 2011. He believes brands will start to put people at the centre of their campaigns to create more personalised advertising.
Social gaming and location-based applications, which allow social media to extend offline, will also be key growth areas this year.
Press
2010 spend: £3.3bn
Yr/yr percentage change: 7%
The outlook for the newspaper industry remains unsteady in 2011, with growth at both regional and national papers forecast by agencies at just 1% to 2%, below market expectations. John Teal, group advertising director at Mail Newspapers, believes a flat year versus 2010 would be a good result.
Meanwhile, the consumer magazine sector, which suffered the greatest hit from the economic downturn, is expected to stabilise over 2011, with growth of about 1% to 2%. Jonathan Barnard, head of publications at ZenithOptimedia, says this will be driven by the general economic recovery combined with reasonable pricing.
Ownership changes are also shaping the consumer magazine sector. NatMags' parent company Hearst has completed its €651m deal for Lagardere’s international assets, including Hachette Filipacchi in the UK, while BBC Magazines seeks a buyer.
As long as display advertising revenue remains big business in national press, says Andy Taylor, head of trading at Carat, newspapers must focus on multimedia offers. "The theme of 2011 is the art of immersion beyond the spot," he says. "We must look at different ways of getting 100% media owner and client brand engagement."
Industry eyes remain on News International’s paywall experiment, as media owners hunt new sources of revenue through paid-for apps and tablet-only products.
Radio
2010 spend: £575m
Yr/yr percentage change: 1%
The radio industry appears to have overcome the dramatically scaled-back advertising spend from the COI, which has traditionally been the medium’s biggest advertiser, accounting for about 80% of radio spend.
The Radio Advertising Bureau contends the industry enjoyed growth of 4% over 2010, and agency forecasts suggest radio will grow by about 3% in 2011. According to Simon Redican, managing director of the RAB, a 15% increase in brand advertising - notably from FMCG, motoring and financial sectors - has helped plug the hole.
Mike Gordon, commercial director of Global Radio, adds: "The industry will look back on 2011 as a definitive year. We will exorcise the loss of the COI while delivering the same revenue."
The industry expects the launch of the UK RadioPlayer on 9 February to boost online listening, which hit a record high of 48 million listeners in Q3 2010.
Meanwhile, the expansion of Heart, Capital, Smooth and, soon, Kiss from regional to national brands offers advertisers a national network and helps commercial radio compete with the BBC. The changes to the Broadcast Act, due to come into force on 28 February, will enable seamless product placement and flexibility for advertisers.
Out-of-home
2010 spend: £879.8m
Yr/yr percentage change: 12.5%
The out-of-home sector saw a rebalancing in 2010 after suffering a bruising 16% decline in 2009. Insiders expect to see growth of between 3% to 4% over 2011.
The sector is looking ahead to increased demand and recovery of rates over the year, the continued growth of mall and point-of-sale advertising, further investment in digital panels, and the start of client spend on the London 2012 Olympics.
Spencer Berwin, managing director of sales at JCDecaux, believes the Games will give 2011 an "unusual shape". "We are more like to see a stronger back half of the year compared to the first as we get nearer to the Olympics."
That said, Kinetic’s trading director Colin Bundock believes the Easter break and annual Bank Holidays, combined with the Royal wedding, will offer advertisers a "real opportunity" to reach consumers through OOH, as they set off to enjoy their breaks.
The sector is also poised for a relaunch of audience measurement system Postar, due later this year, which Clear Channel UK chief executive Matthew Dearden says will make outdoor the most measurable and accountable medium.
Cinema
2010 spend: £184m
Yr/yr percentage change: 3%
Cinema advertising is expected to increase slightly in 2011, with agency and media owner forecasts suggesting it will grow in line with the market at about 3%.
Kathryn Jacob, chief executive of Pearl & Dean, says: "We think it’s difficult to call the market this year - it’s fair to say 2010 took a lot of people by surprise."
Cinema attendance is also predicted to rise from the 169.2 million admissions in 2010 to 174 million admissions in 2011 (source: Digital Cinema Media). DCM reports box office takings in January were up year on year, despite the phenomenal success of James Cameron’s 3D blockbuster Avatar boosting January 2010's figures.
However, the continued economic uncertainty means cinema will remain a popular cheap night out for many and a strong line-up of releases, including 3D titles and this year’s Oscar contenders, should act as a draw.
There will be a continued shift towards digital screens. Digital Cinema Media, which accounts for 80% of the cinema market, predicts 70% of its screens will have been converted to 3D by the end of the year.
All adspend figures provided by The Nielsen Company, except for out-of-home, sourced from the Outdoor Media Centre.