The Expenditure Report

Executive Summary of adspend survey data for Q3 2009 and forecasts to Q3 2011

Summary – Overall UK picture

• Total UK adspend fell sharply again in Q3 2009 – but at a lower rate than Q2.

• Total UK adspend for full year 2009 is now expected to be 12.7% down year on year at current prices, or 14.6% at constant prices. This represents the worst recession since the AA/Warc quarterly survey began in 1982.

• UK advertising is projected to enter recovery in Q3 2010, with its first increase in adspend since the first quarter of 2008.

• Recession has created winners and losers among UK media. Internet is the only medium to increase ad revenues in all three quarters of 2009. Cinema revenues grew in Q3 2009 (+10.2%)

• Cinema and internet have gained share of ad budgets during the slump. Press has been the biggest loser of share. TV and direct mail have maintained their share.

Source: Advertising Association/Warc Expenditure Report, www.warc.com/expenditurereport

Summary – The UK Media Mix

• TV, newspapers, internet, radio and cinema all saw their shares of display advertising spend grow year on year in Q3 2009.

• Internet classifieds (including search) account for almost two thirds of total classified advertising in the UK.

• The internet’s share of total advertising grew by just over 4 percentage points between the year to September 2008 and the year to September 2009. The share of total advertising accounted for by press fell by the same amount.

Source: Advertising Association/Warc Expenditure Report, www.warc.com/expenditurereport

Summary – The UK Advertising Mix

• Most UK display media sectors saw year-on-year declines of between 10% and 20% in Q3 2009.

• Display spend is expected to be flat in 2010 as consumer spending levels remain weak.

• With unemployment rising, recruitment adspend fell by 40% in 2009; even spend on online recruitment fell substantially.

Source: Advertising Association/Warc Expenditure Report, www.warc.com/expenditurereport

Recent year-on-year declines have been greater than those experienced in the early 1990s

%Total UK adspend annual % change (at constant prices)

Source: Advertising Association/Warc Expenditure Report, www.warc.com/expenditurereport

UK adspend recovery will arrive in late 2010: we anticipate Q3 2010 will show a rise of +2.8% (the first since early 2008)

%

Source: Advertising Association/Warc Expenditure Report, www.warc.com/expenditurereport

Total UK adspend annual % change (at current prices)

Only two media sectors recorded a spend increase in Q3 2009

%

Source: Advertising Association/Warc Expenditure Report, www.warc.com/expenditurereport

Annual % change UK adspend, Q3 2009

Note: Internet data for Q3 2009 is a Warc estimate.

Press adspend, particularly classified, has fallen sharply in the year to date

%

Source: Advertising Association/Warc Expenditure Report, www.warc.com/expenditurereport

Annual % change in UK adspend, year to September 2009

Note: Press total combines all newspaper and magazine categories. Internet data for Q3 2009 is a Warc estimate.

The internet’s gain in share comes mainly at the expense of press

Percentage points difference

Source: Advertising Association/Warc Expenditure Report, www.warc.com/expenditurereport

Annual percentage points change in share of UK adspend, Q3 2009

Note: Internet data for Q3 2009 is a Warc estimate.

Internet’s gain in share is further evident when looking at year to date

Source: Advertising Association/Warc Expenditure Report, www.warc.com/expenditurereport

Annual percentage points change in share of UK adspend, year to Sept 2009

Percentage points difference

Note: Internet data for Q3 2009 is a Warc estimate.

The topline data included in this presentation is drawn from the Advertising Association/Warc Expenditure Report.

The Expenditure Report provides detailed and authoritative advertising expenditure data for all major media.

For more information and to subscribe please visit www.warc.com/expenditurereport