WPP’s GroupM, the media investment management group issued its bi-annual global advertising expenditure forecast This Year, Next Year which predicts ad investment growth of 3.4 per cent $17billion incremental in
2015 and 4.5 per cent in 2016 $22 billion incremental. These are slight
downgrades from GroupM’s predictions at midyear for 2015 and 2016 which
were 4 percent and 4.8 per cent respectively.
The intelligence is drawn from data
supplied by WPP’s worldwide resources in advertising, public relations,
market research and specialist communications by GroupM’s Futures
Director, Adam Smith.
“The outlook remains tough. Marketers’
constrained pricing power in a deflationary world, a macro trend,
prompts on-going focus on cost control versus investment and this
colours our outlook. Continued strength across the majority of the BRIC
and Next 11 countries, notably mainland China, is a highlight of the
forecast, but the Eurozone is still struggling to find traction. While
our outlook is overall positive, we recognize the downside risks of
financial pressures in faster growth markets and the changing profile of
China’s external demand,” commented Smith.
According to this report, Brazil, Russia
China and India will represent 23 percent of measured global ad
investment in 2016, a proportion which has grown every year since they
began measuring it in 2000, and GroupM continues adding a point a year
for the BRICs in its modelled forecast through to 2020.
Mainland China remains the largest
contributor to global advertising growth, but GroupM has revised
downward its 2015 forecast from 8.7 percent to 7.8 percent, and the 2016
forecast is also slightly reduced from 9.6 percent to 9.1 percent.
GroupM observes that Chinese consumer
demand remains strong, supported by wage growth, urbanization, property
wealth and supportive governmental policy. However, on the external
side, less demand for primary resources, less foreign direct investment
(FDI), less local tourism, and the impact of domestic goods and services
replacing imports are among the top reasons for ad market slowdowns in
Taiwan and Hong Kong.
Elsewhere among the BRICS, GroupM
predicts that India will be the fastest-growing economy in 2016, and the
2016 forecast is raised by two points to 15 percent. India is a
beneficiary of cheaper oil, as is its Next 11 neighbour Pakistan, which
GroupM also upgraded in the forecast.
Russia is at risk of another step down
in the oil price, but absent another shock, a soft Ruble and room to
ease rates could assist quick recovery. GroupM expects a short, sharp ad
recession of 13 percent in 2015 followed by 2 percent growth in 2016.
And despite the Olympic summer,GroupM revises Brazil’s 2016 down from 9
percent to 7 percent. There, household spending continues to shrink as
unemployment potentially reaches a ten-year high.
The Eurozone now accounts for only 11
percent of global advertising, and Eurozone consumer price inflation
remains near-zero; monetary policy is set to ease just as that of the
USA may tighten. Zero ad growth is forecast in France in 2016, and
German and Italian annual ad growth for 2016 is anticipated to fall only
between 1 and 2 percent.
Spain shows the Eurozone’s strongest
recovery, but advertising investment in Spain will still be 55 percent
smaller in real terms relative to its 2007 peak. In Europe, outside the
Eurozone, high employment and other very positive trends make the United
Kingdom the fastest-growing mature ad market in the world and the
number three contributor to global ad growth in 2016 behind China and
the U.S.
In terms of investments across media
types, the shift of advertiser investment to digital, of course, remains
the biggest trend. GroupM maintains its midyear forecast and
anticipates digital growth of 14 percent in 2016, commanding 31 percent
of global ad budgets. This is a deceleration from the 17 percent growth
predicted for 2015. The slower but on-going strength of digital springs
from many sources including organic take-up, technical innovation,
advances in value, view ability and validation, automation and
efficiency, better creative work, and the mastery of data.
“Facebook is addressable and targeted at
scale with requisite tools and automation that make it easy for
advertisers to understand and use; so it is reaping advertising growth
of 50 percent globally, including Instagram. Organic Google website
revenue is growing remarkably fast too at 25.5 percent, and they have
streamlined YouTube into a complement to broadcaster VOD, even if it is
not yet a real challenger on price or quality,” said Dominic Proctor,
Global President, GroupM.
GroupM believes 2015 will be the first
year that absolute spend in traditional media went backwards in the ‘new
world’ (Latin America, Central & Eastern Europe, and Southeast
Asia). Only a half-point fall is predicted, but this marks rapid
deceleration from the 17 percent growth recorded as recently as 2010.
New world newspaper advertising first went negative for growth in 2012,
followed by magazines in 2013. China’s advertiser exodus from TV to
digital gave the extra push required to make 2015 a negative for
traditional media in the new world. These trends are anticipated to ease
slightly in 2016.
“We see that digital’s data and
automation capabilities are inspiring the evolution of all media — in
all markets across the globe — but digital will continue its powerful
growth and market share gains. This is despite the challenges in the
digital space such as view ability, fraud, measurement and currency, all
of which we expect to be solved by market forces,” added Proctor.
Globally, print media’s share of
advertising will stand at 18 percent in 2016, according to GroupM.
Print’s long-standing run-rate of annual loss is slowing from two points
of share to one, but GroupM notes it is too soon to call it
stabilization. The medium is embracing digital distribution, but only
the strongest franchises are replicating their eminence in the digital
domain. Common obstacles include fragmentation, chronic loss of reach,
and lack of common standards in audience measurement and trading.
Traditional TV continues to stand up
well. TV accounted for nearly 44 percent of global ad investment at its
peak in 2012; since then it has shed about a point a year. China is
responsible for most of this loss because TV advertising became more
rationed and regulated while the digital ecosystem grew by leaps and
bounds. The USA by contrast is perhaps the least-regulated and most
competitive TV ad market, and its TV ad revenue share loss is less than
the global average. It would look even healthier if its digital gains
were properly consolidated with its traditional linear top line.
“TV’s share is rising in almost as many
countries as it is falling and contributors to the forecast identified
three themes of untapped potential: relaxing regulation, improving the
quantity and quality of VOD ad inventory, and format innovation. But
every medium is in the midst of transformation; some to accelerate
growth, others to decelerate share losses; and GroupM, as ever, plays a
central role with the voice of the advertising customer to help shape
the market to the advantage of our clients,” concluded Proctor.
