Adspend forecasts upbeat overall, but duopoly dominates digital

Global advertising spend is predicted to hit $558 billion in 2018, increasing by $23 billion at a rate of 4.3%, according to GroupM’s ‘This Year, Next Year’ media and marketing forecast.

The growth figure is not too far off from the 4.1% predicted by Zenith in its latest forecast report, released around the same time, which predicts a slightly higher number, $578 billion, for total ad spend by the end of 2018. The Zenith forecast is, however, fractionally lower than the 4.2% the agency predicted in September this year. Zenith also expects advertising expenditure to grow more slowly out to the year 2020.

GroupM’s positive outlook is explained by global GDP growth with rising consumer demand. However, the company expects advertising’s share of the global GDP to decrease from 0.70% in 2017 to 0.69% in 2018. GroupM says this indicates ad money flowing to data and technology companies as the industry shifts to digital. The WPP network estimates that 25 cents goes such companies for every dollar that migrates from legacy to digital media.

The US, China, Argentina, Japan, India and the UK will drive 68% of incremental investment next year, according to GroupM, which pinpoints China's rebalancing economy and the successful implementation of 'Abenomics' in Japan for stimulating consumer demand in both countries. 

On the other hand, Zenith identifies the US, China, Indonesia, India, UK, Japan, Brazil, Russia, Germany and Australia as the top 10 contributors to ad spend growth between 2017 and 2020. For the five 'advanced economies' in Asia (Australia, New Zealand, Hong Kong, Singapore and South Korea), growth is forecast at 3.1% average to 2017, slightly above its 2.9% average growth since 2012. Ad spend in Zenith's 'fast-track' APAC countries (China, India, Indonesia, Malaysia, Pakistan, Philippines, Taiwan, Thailand, Vietnam) is expected to grow 7.6% this year, and at an average rate of 6.4% a year between 2017 and 2020.

Zenith says the extended period of mourning for the late Thai king will lead to a second year of decline for Thailand, while Malaysia's recovery from the 2016 economic downturn is slower than expected.

GroupM's forecast calls for 5.4% growth for the APAC region in 2018. 

Traditional to digital

Globally, digital's share of ad investment is expected to increase from 34.1% in 2017 to 36.4% in 2018, according to GroupM's forecast. Excluding China, digital's growth will be moderated from 10.6% this year to 10.5% in 2018. 

Meanwhile, GroupM believes that the duopoly of Facebook and Google will account for 84% of all digital investment and 186% of digital growth in 2017, in markets excluding China. It says the dominance of the duopoly is bad news for the balance of the digital publisher ecosystem but says Amazon is on a fast track to be more prominent in the consolidation of digital ad investment with a few dominant players. The ecommerce giant is the second biggest advertiser in India after its domestic rival Flipkart. 

OOH is the only other area of growth identified by GroupM, as the medium becomes more data-informed and digital. OOH is expected to grow its share from 6.1% in 2016 to 6.2% in 2017 and 6.3% in 2018, its highest portion since 1993. 

In Zenith's report, internet advertising has overtaken TV as the world's biggest advertising medium this year, accounting for 37.3% of total ad expenditure. The media agency expects the growth to slow down as internet advertising matures, but forecasts an average growth rate of 10% between 2017 ad 2020. Internet advertising is expected to account for 44.3% of global ad spend by 2020. 

Online video and social media have been identified as the driving forces of internet ad spend growth, where online video advertising is expected to grow by 17% a year on average between 2017 and 2020 whereas social media will grow by 16% a year.