Another year of gangbuster advertising expenditure growth looks unlikely in Britain, but fair to moderate growth should ensue. Or so says Zenith Optimedia’s forecast for advertising expenditure in Britain this year.
   “Last year’s growth was obviously very strong, harking back to the late 1990s,” says Jonathan Barnard, knowledge management manager at Zenith Optimedia in London. “But we don’t think that is sustainable.”
   Certainly the strong growth in advertising expenditure in 2004, which Zenith Optimedia estimates hit 6.5 percent after taking out inflation, came as a relief after three years of decline.
   But for this year the forecaster only sees growth of 2.4 percent in constant prices (that’s 4.4 percent in current prices) compared with 2004. “We think that advertising expenditure will grow slightly faster than the economy as a whole, but not that much faster,” says Barnard.
  Britain, which is more in step with the U.S. advertising economy than it is with its closer neighbors in Europe, saw a big bump up in its fortunes in 2004 thanks to recovering corporate fortunes and to the Euro 2004 soccer competition.
   Because Barnard sees the advertising economy growing faster than GDP, he believes that advertising expenditure will creep up as a percentage of GDP. By 2007, the end of his forecast period, advertising expenditure should have hit 1 percent of GDP again. This figure hit 0.98 percent in 2004 after having fallen to 0.95 percent in 2003.
   With this in mind, Barnard says: “We are probably heading toward the peak of the cycle. Another downturn is probably another four or so years away.” Thoughts on the next downturn are not what most people want to think about, but inevitably they do roll around.
   But focusing back on the present, not all forecasters agree on the outlook for this year. In fact, Robert J. Coen, the respected forecaster from Universal McCann, is a bit more optimistic about this year, expecting that British advertising expenditure will hit 7.0 percent in growth in current prices in 2005. That’s up from the 6.0 percent he saw in 2004. This difference of opinion is hardly surprising. Zenith tends to be pessimistic about the ad economy generally, while Coen is traditionally more upbeat.
   One thing that both these forecasts have in common is the expectation that 2005 will be a decent year for advertising spending.
   As for the status of the various advertising sectors in 2005, Barnard comments that the technical sector is still an area that is not really looking up.
   However, telecoms, which collapsed in 2002 and 2003 in an even more dramatic way than the dot.com bubble burst, will benefit from the new technology that's coming in, as well as a government ruling that should spur on competition in the broadband arena.
  “When telecoms gets going again that will be a good sign that the advertising market has put behind it some of the damage of the recession,” says Barnard. Telecoms were up 0.8 percent in 2004.
   Government, political and social advertising, which was up 27.8 percent in 2004, could be big this year if, indeed, the expected major elections do take place.
  As for the automotive category, which was the only top-10 category to slide last year (down 1.2 percent), Barnard sees no signs that auto manufacturers are ready to start spending again yet.