Ad Spend Forecast Update 2018: DOOH, Google and Facebook drive Growth

It is the beginning of the new year and we are well into our media planning. December’s forecasts from ZenithOptimedia, Magna Global and GroupM have all upgraded their growth predictions for global ad spend for 2018 and as always, we are here to give you a rundown.
Overall, growth will be largely driven by cyclical events such as the FIFA World Cup in Russia, Winter Olympics in Korea and US mid-term elections.  Global GDP growth with rising consumer demand also contribute to a more positive outlook for 2018. All three forecasters predict TV and OOH advertising will be the second and third-largest contributors to growth. TV ad spend will grow largely due to cyclical events (2.5% in 2018), and apart from Internet, OOH will be the only medium with a growing share [Magna Global].

Ad Spend Key Takeaways

• Overall, global advertising spend growth is forecasted between 4% - 5% in 2018, aided by cyclical events
• Out-of-Home (OOH) growth of 3% will reach an all-time high of 30 billion USD in 2018, driven largely by Digital Out-of-Home (DOOH) [Magna Global]
• DOOH will grow by 15% in 2018 reaching 5 billion USD and accounting for 18% of total OOH spend excluding cinema [Magna Global]
• Digital ad spend overtakes TV in 2017. However, 2018 forecasts for digital share of global ad spend vary among sources:
  • Zenith: 44% by 2020
  • Magna: 44% by 2018 and 50% by 2020.
  • GroupM: 36% by 2018
• Google and Facebook are predicted to account for 84%  of all digital ad spend in 2017, excluding China [GroupM]
• In 2018, six countries will drive 68% of incremental growth: US, China, Argentina, Japan, India and UK [Magna Global]
• Between 2017 and 2020 the top five contributors to ad spend growth will be US, China, Indonesia, India and UK [ZenithOptimedia]

Outlook by Medium
OOH reaches a record high market share

OOH ad spend forecasts show an impressive growth on all fronts - a 3% growth for 2018 (in line with 2017) and a market share of 6.3% - a record high since 1993, according to Magna. ZenithOptimedia forecasts offer an equally positive outlook with 6.7% and 6.6% global share in 2017 and 2018 respectively.The positive outlook is largely due to accelerating technological developments within the industry. Forecasters highlight how Digital out-of-Home (DOOH) makes the decisive contribution to ad spend growth over the coming years – 15% sales growth in 2018, reaching 5 billion USD and accounting for 18% of total OOH spend (excluding cinema) [Magna Global].
GroupM discusses the attractions of DOOH as it becomes “more data-informed, digital and versatile. The combination of location data with purchase, social media and viewing behaviour presents an increasingly compelling proposition.”

Google and Facebook help Internet overtake TV

Forecasts state that in 2017, Internet ad spend will have surpassed TV and will continue to grow 13% in 2018, reaching 237 billion USD (a 44% share) [GroupM].
Looking at Internet spend more closely; Google and Facebook will have accounted for a whopping 84% of all Internet spend in 2017 (excluding China) [Magna Global]. And mobile continues to drive ad spend with a 29% share of total spend and 65% share of Internet [ZenithOptimedia]. Search, mobile video and social are still outperforming all other formats.

Outlook by Region
Latin America, Eastern Europe and Asia’s healthy growth

Forecasts by region point to a moderate acceleration across countries with few exceptions.
According to Magna Global, the fastest-growing countries for 2018 will be Brazil, Argentina, India, China and Russia. And looking at the stand-out regions in 2018, Latin America leads the way with an accelerating spend of 9.3% in 2018 (vs 7.3% in 2017), followed by Asia Pacific (5.9%) and North America (5%).
GroupM forecasts that the fastest-growing regions in 2017 and 2018 will be Southeast Asia (ASEAN) (12.2%), Central and Eastern Europe (8.8%) and Latin America (6.6%).
Zenith’s 2018 list showcases the fastest growers; Latin America (3.4%), fast-track Asia* (6.5%) and Eastern Europe (10.2%) while MENA is still the underperformer in terms of growth.  In the case of Europe, despite some political uncertainty and slow economy, the region’s growth is still set to accelerate in 2018 to 2.5%.

Notes:

Fast-track Asia: China, India, Indonesia, Malaysia, Pakistan, Philippines, Taiwan, Thailand, Vietnam

Sources:
* ZenithOptimedia** Magna Global*** GroupM