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Digital ad spend might be growing by double digits, but GroupM has still written down its global ad expenditure forecast for 2016 from 4.5 per cent to 4 per cent after witnessing slowing growth in the emerging markets of China and Brazil.
In its latest biannual worldwide media and marketing forecasting repot, This Year, Next Year, the agency put global ad expenditure forecast at US$529 billion, and also pitched its initial outlook for 2017 to $552 billion, or 4.3 per cent growth. Despite the lower projections, however, total marketing services expenditure, including advertising plus marketing services, is expected to hit $1 trillion for the first time next year.
In China, GroupM reported 2016 growth is now forecast at 6.6 per cent, a drop of 2.5 per cent on initial projections, triggered by a slowdown in fixed investment and profits. This puts China’s initial advertising growth estimate at 7 per cent. Brazil has also witnessed growth slow and been hit by a continuing economic recession and political issues, which saw 7 per cent growth forecasts in 2016 slashed to 1 per cent.
As a result of these figures, GroupM expected the US to be the lead contributor of global ad growth this year for the first time since China took over the top spot in 2007. The agency revised its advertising growth estimates for the states from 2.7 per cent to 3.1 per cent, mainly due to a healthier TV marketplace.
India remains the fastest growth larger economy, with a forecasted annual rate of 14 to 15 per cent both this year and in 2017. GroupM suggested the country will be the 10th advertising market in terms of size by 2018 with more than $10bjn in annual investment.
The growth of digital spend was the other big component to the report. GroupM found that while digital growth remains high, it has dropped from 18 per cent in 2015 to 14 per cent in 2016, and is predicted to reach 12 per cent in 2017. Digital is expected to account for 99 per cent of all net ad growth this year and 31 per cent of investment and is forecast to reach one-third of all ad expenditure by 2017.
“The impact of media consumption migrating to digital platforms, and the flow of advertising investment with it, must not be underestimated by advertising clients,” commented GroupM Global president, Dominic Proctor. “This fragmentation of billions of consumer impressions across thousands of platforms demands the use of data and technology to create bespoke and meaningful targeted audiences for brands.”
The UK’s vote to exit the European Union was also given a mention. GroupM’s futures director, Adam Smith, said there was no tangible evidence of Brexit impacting budgeting decisions yet, but he expected less investment over the next 6-12 months. Even with some deferred investments, the agency forecast UK ad growth to hit 4.5 per cent this year, largely thanks to digital, and said its base case remained at 6.3 per cent.
In Australia, GroupM figures pegged total forecast total media spend at $14.5bn in 2016, up 2.4 per cent year-on-year, with total digital spending at $6.7bn, a rise of 11 per cent on last year. 2017 total media spending is expected to reach $15.1bn, up 4.3 per cent on this year’s result, with digital just shy of 50 per cent of that figure.
Commenting on the results in Australia, GroupM said the strongest growth in digital will come from video over the next five years, while spend on mobile search and display is also predicted to double in the next couple of years.
Digital will also have significant benefits for the out-of-home market, and GroupM highlighted location data combined with purchase, social media and viewing behaviour, as major driving forces.