Ad executives fear media price inflation

There are no signs of growth in print advertising at the moment, while ad spending in TV has surged

Advertising executives fear media price inflation as prospects for advertising increase and analysts push up their growth forecasts for the UK market, the Financial Times has reported.

There are currently no signs of growth in print advertising, but ad spending in television has surged 11.6 per cent to £3.3bn this year compared to a fall of 11.1 per cent in 2009.

GroupM, WPP's media-buying division, has pushed up its forecasts for UK advertising from flat to growth of 4.2 per cent to £11.8bn in 2010. It predicts 3 per cent growth in TV advertising in 2011 and a 3.3 per cent growth in the media market as a whole to £12.2bn.

The paper quoted Adam Smith, futures director at GroupM, as saying that a combination of factors, including the return of "dormant" advertisers, the return of branding over promotional spend and low media pricing, is driving media price inflation. He added that the cheaper rates of TV ads have prompted advertisers to release money towards advertising, which has "set the inflation machine in motion".

Marc Mendoza, chief executive of MPG UK, a media agency owned by Havas, noted that advertisers can tackle this type of situations by spreading their ad spends across various types of media instead of sticking to one form.