Advertising spend in 2017 is predicted to increase by 4.4 per cent year-on-year to $547bn (£430bn), according to the world’s largest media investment group, WPP’s GroupM. It is expected that digital’s share will reach 33 per cent.
In 2016, digital captured 72 cents of every new ad dollar and TV 21 cents. GroupM predicts that digital’s capture will increase to 77 cents, with TV decreasing to 17 cents, in 2017. The US and China account for half of all net growth in 2016 and 2017 – China narrowly edging US.
GroupM revised China’s 2016 growth to an increase of 7.8 per cent, up from the originally predicted 6.6 per cent, after a late surge towards the end of the year. FMCG advertising rose 4.6 per cent in the second quarter year-on-year, a higher rate than the predicted 2 per cent forecast. Despite this, China’s digital advertising is expected to slow to 21.5 per cent next year, down from 29.5 per cent in 2016, after coming off peak growth.
In the US, GroupM has fractionally revised growth, in 2016, from 3.1 per cent to 3.2 per cent – including an increase in TV from 3.4 per cent to 4.1 per cent. This was due to some redirection of budgets from digital to TV, particularly by pharmaceutical and CPG companies. In 2017, growth has been shaved to 2.6 per cent because of weak global and US GDP growth, as well as political uncertainty.
The UK’s Brexit vote may have impacted financial markets but has yet to affect advertising. The UK’s forecast was upped to a digitally-led seven per cent annual rate, delivering a prospective $3bn incremental investment over 2016 and 2017 – compared to $3.3bn for rest of EU combined.
“Ad growth has shadowed the global economy's long, low and level recovery cycle since 2010. These new forecasts emphasize the ad story of our times is however structural, not cyclical,” said GroupM’s future director Adam Smith. “Twenty years on from the internet becoming a measured ad medium, digital remains the engine of advertising growth and disruptor-in-chief of the entire marketing economy. This multiplies options, opportunities and risk. The importance to advertisers of autonomy and diligence has never been higher.”
In BRICS, Brazil has seen increased digital adoption – particularly in mobile. Since beginning of the year, mobile users grew 22 per cent. Despite this, modest ad growth of 2 per cent is expected in 2017.
India is the fastest growing market in the world’s top ten, with ad markets in excess of $10bn. Growth is forecast at 13.8 per cent in 2016 and 12.5 per cent in 2017, with ‘low interest rates, sustained urban demand and the impact of key reforms.’
Russia’s forecast, for 2016, is at 9.5 per cent – with growth in paid search and higher demand for TV in Q4 key contributors. Over half of paid search demand is from smaller businesses that cannot afford other media, although demand from larger advertisers is also strong. GroupM predicts 10 per cent growth in 2017, mainly driven by TV and internet.