SOHO GLORY will have to wait a while longer: This looks set to be another year of slow, if steady, progress in advertising — a frustrating continuation of the pattern that has followed the bursting of the dot-com bubble in 2001.

Throughout most of the 1990s advertising grew by at least 4.5 per cent a year in real terms — after discounting for inflation — culminating in a 7 per cent surge in 2000. But since the world came crashing down, actual growth has been minimal — indeed it fell for three years running before a partial recovery last year.

“The market remains quite difficult in the UK,” Sir Martin Sorrell, chief executive of WPP, the owner of J Walter Thompson and Ogilvy & Mather, said. “Overall growth will be below the 2 to 3 per cent range we are expecting worldwide,” he added, although the WPP man believes that, in Britain at least, the market is better than “a flat to slightly up” 2004.

Sir Martin has been consistently the most pessimistic of the key figures in the advertising industry. Back in 2002 he said that the industry would face a protracted “bath-shaped” recession, and now that we are out of the bath he has taken to warning the industry to “watch out for the shower”.

There are no major sporting championships this year, and the expected British general election has only a limited impact outside the outdoor market because broadcast political advertising is free.

Zenith Optimedia, the advertising research group ultimately owned by Publicis, has pencilled in real-terms growth of 2.4 per cent, a prediction along the lines of Sir Martin’s thinking, compared with 6.5 per cent last year.

But others are more optimistic. Omnicom’s Universal McCann surprised many of its rivals with a forecast of 7 per cent growth in the UK. The prediction is not offset by inflation, but, for comparison, Zenith is expecting 4.4 per cent on the same basis.

Universal McCann, which handles accounts for the likes of Coca-Cola and General Motors, believes that expectations will improve during the year. “This time last year, for example, our clients were saying that they would not increase spending,” Chris Shaw, of Universal McCann, said. “But they hold back anywhere between 2.5 per cent and 10 per cent of their budgets and start to commit it if confidence improves during the year. This year, however, people are already talking about modest growth.”

The overall picture diguises several important variations. Real-terms growth in the £4.6billion market for newspaper advertising will be modest and advertisters continue to complain about declining circulations and “a lack of innovation”.

Ironically, the one sector that has recovered rapidly since 2001 and continues to grow strongly is online advertising. Having started the recession, it was the first to recover, more than trebling in size during the past two years to reach £552 million. The expectation is for growth to remain in the double-digit range.

The most interesting story this year, however, will be broadcasting, which accounts for £4 billion of spending. Zenith, for example, believes that “TV represents good value” as audiences rise (partly due to an increasing number of households) while costs are subdued, largely because ITV, which controls half the market, has promised to peg prices at 2003 rates for the next five years.

Meanwhile, radio technology is changing fast and will increasingly morph into an online medium.

In some quarters the subdued growth in advertising is taken as a sign that the means of communication is losing its importance. The emergence of personal video recorders (PVRs) — digital video recorders such as Sky Plus — supposedly makes it easier to fast forward past ad breaks on television. Similar technology is coming to digital radio this year.

But the excitement over PVRs is probably too great. Firstly there are not many PVRs around. Sky Plus has only 474,000 customers, although the number is growing. More to the point, fast forwarding has been possible from the moment the timer video recorder first emerged two decades ago, and it has not hurt ITV much yet.

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