Advertising costs to increase in 2012

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With global advertising spend expected to rise by 6% this year, businesses must prepare for costs in the sector to increase.

4C industry sources indicate that advertising prices within the media market will likely increase by 3.3 per cent.  Internet advertising inflation is expected to rise by seven per cent, radio by five per cent and television by three per cent. The national press is the only major sector where inflation is set to decrease in 2012 (down one per cent).

Global Growth

The global advertising sector is growing quickly, potentially making it more difficult for businesses to secure good value contracts. Several marketing agencies have reported strong results and with events such as London Olympics and Euro 2012 on the horizon, the market, at least in the short-term, seems destined to grow.

Both WPP and Aegis, two marketing agencies, have reported strong results this month. Aegis recorded a 10 per cent increase in profits for 2011, taking its pre-tax profits to more than £1 billion.

When asked about his predictions for 2012 Jerry Buhlmann, Aegis Group Chief Executive, said; “We are optimistic about the outlook for the advertising sector in 2012, supported by key sporting events and the US presidential elections, and we anticipate further success for the group in the year ahead.”

WPP also saw a surge in profits in 2011 and has reported an 18 per cent increase for the year and pre-tax profits of more than £1 billion. WPP highlighted strong growth in all markets, particularly in Asia Pacific and Latin America, as the reason behind the businesses’ positive performance.

According to Carat, part of the Aegis group, advertising spend is expected to grow 6 per cent in 2012 and 5.8 per cent in 2013.

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