MUMBAI: 2018 is looking more positive for global advertising expenditure than previously expected, findings released by advertising and digital communications group Dentsu Aegis Network in its biannual forecast reveals.
Ad-spend growth will rise from 3.3% in 2017 to hit 3.9% in 2018 – higher than the 3.6% forecast in January 2018 and taking total investment to $613.5 billion. Global events such as the Winter Olympics & Paralympics, the FIFA World Cup in Russia and US mid-term elections will play an important role in stimulating growth.
Geographically, Asia Pacific and North America are the major growth regions, contributing 41% and 32% of the global increase respectively. Western Europe accounts for 13% with Latin America at 8% and Eastern Europe 5%.
Specific to India, advertising spend is expected to grow by 10.5%, to reach Rs 624 billion in 2018.
Commenting on the latest forecasts, Jerry Buhlmann, CEO of Dentsu Aegis Network, said: “In the context of synchronised economic growth across the US, Europe and Asia, these figures point to a more positive outlook today than at the beginning of the year and represent a modest but encouraging source of optimism.
“We are seeing upward revisions in most key markets, with emerging economies such as India showing high rates of growth. The US economy is growing strongly as economic stimulation and tax cuts filter through. Spend in China continues to grow at pace, though driven almost entirely by the ecommerce platforms, Alibaba, Tencent and Baidu.
“Digital remains the dominant growth area with 25% of global advertising spend expected to be delivered through mobile for the first time. Digital is now the leading form of advertising in 21 out of the 59 markets we track.”
Speaking on the Indian context, Kartik Iyer, president- Media Brands and Amplifi – Dentsu Aegis Network India said: “India’s ad spend is projected to grow at 10.5% as compared to the beginning of the year when the growth was expected to be over 11% (Dentsu Aegis had actually predicted 12.5% growth in January). Digital continues its rapid growth (31.9%) with online video –gaining in share. This has been driven largely by the availability of high speed connectivity across the country, it is only set to grow faster. TV with a projected market share of 39.1 % continues to lead the media share of pie with Print at 29.3%. It wouldn’t be a surprise to see some forward thinking brands trying to use video instead of TV in a few test and learn cases.”
Key market trends
· India: India advertising spend market is expected to grow in 2018 by 10.5% to reach Rs 624 billion ($9.168 billion). Though there had been a slow start in Q1-2018, the market was picking up from March-April, fueled by a stable recovery post demonetization/GST/RERA buoyed by the state elections in Meghalaya, Tripura, Nagaland and Karnataka in April. The India South Africa cricket series in January, budget announcement in February, lead to continued expansion and growth of regional newspapers and television. Both social and online video will see growth for the next five years as India continues to evolve their internet, mobile, cloud audience.
· China: China’s advertising market is predicted to grow 6.5% in 2018, up from the previous forecast of 5.4%, to reach RMB 630 billion – 16.2% of global ad investment. Growth will be driven by digital, which is forecast to command 60% of advertising spend and increase by 14.8%. The online giants Baidu, Alibaba and Tencent (BAT) are projected to contribute around 80% of this growth, underlining their dominance of the marketplace. Mobile payments are also one to watch in the coming years as platforms such as WeChat or Alipay make cash obsolete in large parts of the country.
· United States: US advertising spend is forecast to show continued growth in 2018, increasing by 3.4% to reach $217.3 billion. The Winter Olympics brought in around $1.6 billion of advertising spend. Local TV is where politicians look to spend, with National TV reaching 90% of the US population. It is predicted that more than $2.8 billion will be spent on the upcoming mid-term elections. Mobile ad spend is forecast to grow by 21.2% in 2018, revised up from 20.2%, with the majority of spend going towards in-app advertising (80%).
· UK: At a time of debate around the UK’s post-Brexit growth prospects, investment in the UK advertising market is expected to grow in 2018 by 4.2% to reach £20.4 billion—an upward revision on the 3.8% forecast in our January 2018 report. Q1 revenues out-performed expectations driving optimism of further growth across full-year 2018. TV, Print and Radio revenues are all up vs. turn-of-the-year forecasts, whilst all media channels are looking to exploit this summer’s FIFA World Cup to further drive growth in Q2.
Report Highlights
– Forecast growth revised up to 3.9% from 3.6% in January 2018
– Sporting and political events play a key role in driving ad spend
– Digital to overtake TV for the first time, to reach 38.4% of global share (TV 35.5%). In 21 out of the 59 markets tracked, digital will be the leading advertising channel in 2018
– One quarter (25.2%) of global ad spend will be delivered through mobile devices for the first time
– China’s advertising market is predicted to grow 6.5%, up from the previous forecast of 5.4%, to reach RMB 630 billion – 16.2% of global ad investment. Ecommerce platforms Baidu, Alibaba and Tencent (BAT) are forecast to contribute around 80% of this growth
– US advertising spend to show continued growth in 2018, increasing by 3.4% to reach US$217.3 billion, reflecting the stronger US economy
– Investment in UK ad spend is also expected to grow by 4.2% to reach £20.4 billion
