Recent “political convulsions” in Brazil that have tempered expectations for the Rio Olympics, coupled with a slowdown in China, have led to a downward revision in GroupM’s latest global ad spend predictions.
In the latest edition of its This Year, Next Year ad forecast, GroupM is calling for global ad growth of 4% or US$20.5 billion in 2016, down from 4.5% or US$22 billion in a prior report.
The report said there was “no tangible evidence” of a “Brexit effect” in either macro indicators or ad budgeting decisions, though it did agree with the Bank of England’s assessment that some businesses are beginning to delay investment projects and postpone investment decisions.
Digital: “High but moderating”
In other macro trends, the report said digital growth remained “high but moderating” – from 18% in 2015, to 14% in 2016 and 12% in the first forecast for 2017. It said China noted the first signs of diminishing returns as digital surpasses 50% of that country’s measured media investment.
Globally, digital accounted for 28% of overall advertising expenditures, and is expected to rise to 31% by 2016 and reach one-third of all ad expenditures by 2017. GroupM said a “rapid rise” in programmatic investment was a driving factor.
The report said traditional TV’s share of the global ad market “continues to hold up well,” losing approximately 1% a year since peaking at 43% between 2010-2014. Elsewhere, newspapers and magazines are expected to shed another 2% this year to command approximately 17% of worldwide ad expenditures.
“This metronomic rhythm of decline stretches back over 10 years and becomes progressively harder to arrest as reach falls, advertisers depart and those that remain become more occasional,” said the report.
U.S. takes over from China as global growth leader
GroupM said the U.S. would overtake China as the leading contributor of ad growth in 2016, marking the first time since 2007 the world’s most populous country has not been the worldwide leader. The report said the two countries would contest the race “closely” for the foreseeable future.
India on track to become a $10 billion-dollar ad market
The report said the combination of stable finances, sustained urban demand and important reforms meant India is the fastest-growing larger ad economy, at a forecast annual rate of 14-15%.
The report said India’s current trajectory, put it on track to become the world’s 10th US$10 billion advertising market by 2018, with the TV advertising market (US$305 billion) roughly three times as large as the digital ad market (US$100.4 billion).
Canada
GroupM said Canadian advertising revenues would rise 0.8% to C$12.9 billion this year, increasing a further 1.3% to $13.03 billion in 2017.
Much of the growth is being driven by digital, which continues to beat forecasts, growing 11% in 2016 and a further 10% in 2017 to US$5.6 billion, controlling 39.5% of the market.
According to GroupM, the market is seeing “huge growth” in various digital components including programmatic, online video, social media and mobile.
Elsewhere, the report said Corus Entertainment’s $2.65 billion acquisition of Shaw Media gives the company a 32% share of Canada’s 25-54 TV audience, closing in on Bell Media’s 35% share. The report said the scale of Bell and Corus might encourage further consolidation in the broadcast space.
It said the TV industry had begun taking the required action to “future-proof” the medium and lock in advertising, saying the December rebrand of the Television Bureau of Canada to ThinkTV has produced “an immediate and noticeable change” in how the industry communicates to advertisers.
The report also noted the industry is mirroring advances elsewhere around the world in “future TV” with both Bell and Rogers Media signing programmatic partnerships with Videology and Corus with Visible World.
All three broadcast groups are expected to offerprogrammatic TV transactions beginning in the fourth quarter, with GroupM predicting as much as 10% of inventory – by audience, not minutes – could be purchased this way in the short-term.
TV is projected to attract US$3.19 billion in advertising this year, declining slightly to US$3.13 in 2017.
The report also noted the declines in print advertising were increasing rather than stabilizing, with newspaper revenues falling from $2.1 billion in 2015 to a projected $1.5 billion in 2017. Magazine advertising, meanwhile, is expected to fall to $541 million in 2017 from $668 million in 2015.
Elsewhere, the report said commercial radio continued to be a “robust” business, with revenues growing 3% to US$1.63 billion in 2016 and a further 2% to $1.68 billion in 2017.
“Reinvigorated” by the combination of digital technology, sales innovation and its strong links to mobile, out-of-home is expected to grow 2% to US$542 million in 2017, while cinema is “successfully monetizing strong admissions” to produce growth of 2% and 2.3% in 2016 and 2017 respectively.
