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Global Ad Spend Forecasts Q4 2016: slower but healthy growth
JCDecaux OneWorld
A Global Overview
Advertising expenditure in 2017 is predicted to show a slower growth due to increased economic and political uncertainty with events such as Brexit and national elections in several markets, and fewer cyclical events like the Olympics and other major sporting tournaments.
2015 - 2016
Ad spend is predicted to grow 5.7% mainly driven by digital (17%). Whereas offline media (TV, print, radio, OOH) has almost flat growth of 0.3%. Political and cyclical events such as the US elections, UEFA Football tournament, Olympic Games and Copa America have boosted ad spend in 2016.*
2016 - 2017
In 2017, Digital is predicted to grow 13%, compared to other offline media (-1.8%). Out-of-Home (OOH) is the exception in the group and will maintain a healthy growth of 3.7%.*
Analysis by Medium
OOH advertising will be the 3rd largest media spend contributor in 2017. The growth of this medium is driven in particular by Digital Out-of-Home (DOOH) and the roll-out of new digital screens, which increase monetisation of sites. OOH will grow by USD 3 billion, while radio and cinema will grow by just under USD 1 billion each. *
2017 Ad Spend Forecast: YOY % growth
For the moment, TV remains the leading medium in display advertising, with 36% of market share in 2016. ** However, both Magna and ZenithOptimedia expect online advertising to overtake TV to become the largest medium in 2017.
Magna forecasts digital to continue with strong growth in 2017. Outperforming all offline media, digital remains the top-performing medium with 13% ad spend growth. In the meanwhile, ZenithOptimedia has a slightly more modest forecast with an 11% growth 2017-2019. Furthermore, according to Magna, digital will have 40% market share by 2017. The fastest growing portions of the digital advertising economy are the formats that are most rapidly transitioning to mobile spend: social media, video, and search advertising.
Newspapers and Magazines will continue to shrink at average rates of 5% and 4% a year respectively between 2016 and 2019 as readers continue to move to online versions. **
From a regional perspective
According to ZenithOptimedia, global growth will be bolstered by the recovery in Eastern Europe and the continued rise of Asian markets. Furthermore, it forecasts China to contribute 25% to global ad spend growth between 2016 and 2019. Magna Global forecasts the US to be the leading contributor to the global market for the next three years, but China, with its large-scale, rapid growth will be coming in second.
Overall, half of the largest contributors to media spend will be emerging markets. These markets are expected to contribute 54% to ad expenditure between 2016 and 2019, increasing their global market share from 38% to 40%. **
A balance in Central and Western Europe despite political events
According to ZenithOptimedia, ad spend growth in Central and Western Europe had stayed largely unchanged since 2014 at from 4% per year, with an average rate of 3.9% a year in 2017.
Similarly, Magna reports ad spend growth in Western Europe of nearly 4% for the third consecutive year, reaching USD 100 billion in 2016. However, growth was significantly lower in the second half of 2016 and is expected to slow down to 2.4% in 2017.
The UK has been the stand-out growth market for the last four years but it is now slowing down. A possible side effect of Brexit has been a slower predicted ad spend growth of 5.2%, compared to 9.2% in 2015. *
ZenithOptimedia predicts a faster growth in Spain (2016: 4.8%, 2019: 6.5%), Sweden (2016: 7.6%, 2019: 9.1%) and France (2016: 0.9%, 2019: 1.2%). These markets should help compensate for the slowdown caused by Brexit in the UK.
Eastern Europe bounces back
Central and Eastern European ad revenue increased to 6% reaching USD 16 billion in 2016. The Russian and the Turkish markets recovered quickly after the 2009 downturn and have continued a healthy pace of growth. ZenithOptimedia forecasts 8% growth in Russia. **
North America, the largest market, keeps up growth
North America remains the largest advertising market in the world. ZenithOptimedia forecasts strong growth in 2016 (4.3%) thanks to the spending among the pharmaceutical and packaged goods advertisers. However, it predicts a slower growth of 3.4% in 2017; marginally behind Central and Western Europe at 3.9%, but still strong.
Magna forecasts reflect the significant impact of cyclical events on the ad spend in the US. With the elections and the Olympics, the market saw the strongest growth in 12 years, reaching USD 180 billion in 2016. However, without such events in 2017, ad spend in the US is predicted to slow down from 6.7% in 2016 to just 1.8% in 2017.
Asia Pacific’s positive growth despite China’s slowdown
China accounts for 74% of advertising spend in Fast-track Asia, so naturally, its present slowdown has a large effect on the region as a whole. These markets are predicted to grow at an average rate of 8% a year 2016-2019, down from 10.8% in the previous five years. **
Growth rate for Advanced Asia will average 2.6% a year through to 2019. Japan is the exception from the rest of Asia, which continues with a low growth of 1.8%. **
Unstable times in the Middle East and North Africa reduces advertiser investment
Political turmoil and conflict shake advertisers’ confidence in MENA. ZenithOptimedia forecast a 1.8% decline in 2016, followed by -7.3% in 2017, -4.2% in 2018 and -3% in 2019. The consecutive declines result in the average annual forecast rate of -4.9% by 2019 in the Middle East and North Africa countries.
Latin American contrasts agree on a mild recovery
Argentina, Brazil, Ecuador and Venezuela are currently suffering a recession. However, ZenithOptimedia predicts a small step towards recovery through to 2019, with an average growth of 1.7% per year.
According to Magna Global, Latin America managed to grow 5.5% in 2016, bolstered by campaigns for the Summer Olympics that took place in Brazil. Magna forecast a 6.2% growth in Latin America in 2017.
Sources & Key:
*Magna Global Global Advertising Forecast Winter Update 2016
**ZenithOptimedia Advertising Expenditure Forecasts December 2016
Notes:
Fast-Track Asia (ZenithOptimedia): China, India, Indonesia, Malaysia, Pakistan, Philippines, Taiwan, Thailand, Vietnam
Advanced Asia(ZenithOptimedia): Australia, Hong Kong, New Zealand, Singapore, South Korea
