WPP's media investment arm Group M (of which MEC is a component agency) has announced its latest UK advertising expenditure forecast for the full year 2010 (up 7.7 per cent) and 2011 (up 3.6 per cent).

In common with many mature markets, the UK’s ad recovery in 2010 has been broad-based and better than expected. A year ago, when we imagined growth impossible, we would have dismissed as fantasy the 8 per cent we now think 2010 will record. In retrospect, we should have given more weight to the effect low prices have on demand.

Notable advertising growth categories in the year to September have been retail (despite half-steam-ahead consumer spending), food, and beauty. Motors, finance and ents and media raised investment in line with the market average, favouring certain media. Growth in 2011 will be harder to come by, and our media forecast remains in the 3 per cent to 4 per cent range.

Taxes will rise quickly, sharply, and until further notice. Deloitte calculates the effect as equivalent to eight pence on the basic 20p rate of income tax. Household spending will almost certainly fall in 2011. Although corporate UK is spared much of the new taxes, it faces higher energy and raw materials costs (including newsprint). 

One cost unlikely to rise much is labour, thanks to the publicsector shakeout and general timidity of wage demands. Our best hope for ad growth is the willingness and ability of UK plc to invest ahead of recovery. The private sector is generally liquid and solvent, hence the unusually low rate ofcompany failures. Top-line growth now depends on innovation and restoring investment, and marketing is one of these levers. 

This cannot compensate for a lack of full-throated consumer recovery, but if marketers elect to advertise, it would be enough to keep media investment growing in 2011 even if the economy grinds to another halt.