In yet another sober reminder of its continued revenue challenges, global media agency GroupM expects advertising in traditional media to fall for the first time ever in emerging markets like Latin America and Southeast Asia.
While the company predicts investment in traditional media will fall by less than one percentage point in the “new world,” it also marks a “rapid deceleration” from the 17% growth recorded as recently as 2010.
GroupM said new world newspaper advertising first “went negative” in 2012, followed by magazines in 2013. The report said an advertiser exodus from TV in China provided the “extra push” that brought about negative growth for traditional media in emerging markets.
The findings are part of GroupM’s bi-annual This Year, Next Year forecast, which predicts global ad spending will grow 3.4% (approximately $17 billion) in 2015 and 4.5% ($22 billion) in 2016. Both figures represent slight downgrades from the media company’s mid-year predictions of 4% and 4.8% growth, respectively.
GroupM futures director Adam Smith said the outlook “looks tough” as marketers increasingly focus on cost control versus investment.
Advertisers’ shift towards digital, meanwhile, shows no sign of abating, with GroupM calling for digital growth of 14% in 2016.
While that represents a deceleration from 17% predicted for 2015, GroupM said digital would command 31% of global ad budgets in 2016, with its ongoing strength a testament to organic take-up, technical innovation, advances in value, viewability and validation, automation and efficiency, better creative and the mastery of data.
In its own report released Monday, Interpublic’s Magna Global unit called for global ad spending to increase 4.6% to US$526 billion next year, driven by non-recurring events including the U.S. presidential election, Euro 2016 and the Summer Olympics in Brazil.
The report noted Canadian ad spending grew just 1.1% to C$12.9 billion this year, less than half the 2.7% it predicted in its June forecast. The report noted 2015 TV revenues are expected to decline by 2.2% – representing the fourth straight year of decline – despite the “minor drivers” of a longer-than-expected federal election campaign and the Toronto Blue Jays’ playoff run. It predicted the decline would continue through 2020, with a drop of between 2-3% per year.
It also noted the “uncertainty” in the specialty market – which accounts for approximately 40% of the TV ad market – brought about by the CRTC’s decision to allow consumers to select channels on a “pick-and-pay” basis. Magna global said the ruling might encourage cable subscribers to drop non-essential channels in order to save on their monthly bill.
Canadian digital spending increased 13.5% to C$4.6 billion and a 35% share of the total ad market, with Magna Global calling for a 10% erosion of print ad revenues and a 2% decline for radio. However, it called for the Canadian market to “re-accelerate” to 2.5% growth in 2016.
According to GroupM, Facebook is among the largest beneficiaries of the continued adoption of digital, noting it is addressable and targeted at scale, with requisite tools and automation that make it easy for advertisers to understand and use. That has led to 50% growth globally (including Instagram).
Google, too, is growing “remarkably fast,” at 25.5% with YouTube streamlined into a complement to broadcaster video-on-demand, even if it not yet a real challenger on quality or quantity.
While acknowledging ongoing issues such as viewability, fraud, measurement and currency are a challenge for digital, GroupM’s global president, Dominic Proctor, said Google’s data and automation capabilities are inspiring the evolution of all media across the globe.
The report said TV’s share is rising in nearly as many countries as it is falling, with the reporting identifying three areas of untapped potential: Relaxing regulation, improving the quantity and quality of VOD ad inventory, and format innovation.
