Digital media is continuing as the top driver of growth in global advertising, capturing 72 cents of every incremental ad dollar this year and likely to get 77 cents next year, according to a new forecast by WPP’s GroupM, the world’s largest ad buyer. TV spending will comprise 21 cents of each new ad dollar this year, by comparison, and 17 cents next year.
Those figures leave to the side print, where ad spending is falling. But TV remains the larger medium by ad spending, with 42% of the global pie this year and likely 41% in 2017, according to GroupM. Digital spending will rise from 31% in 2016 to 33% next year.
“Digital keeps surprising us,” said Adam Smith, GroupM futures director. “What’s surprising is the bigger the appetite for digital is, the bigger it gets.”
Many TV executives in the U.S. had argued during their annual sales pitches this summer for the upcoming season that momentum was swinging back their way as marketers got sick of problems with digital advertising such as fraud.
But digital continues to grow, Mr. Smith said, lifted by paid search, ecommerce and ads on mobile devices.
“If you look at the growth trajectory of digital, if it carries on taking a point or two of share from other media, is TV threatened, and if so, what can we do about it?” said Mr. Smith. More data and technology should support TV marketing, such as addressable ads allowing marketers to target consumers by household, he said.
Total advertising spend worldwide for 2017 is predicted to be $547 billion, up 4.4% from $524 billion in 2016, according to the report. The U.S. and China will be responsible for half of the net growth this year and next year, it said.
Despite some uncertainty around the effects of the U.S. presidential election and potential policy changes and Brexit in the U.K., Mr. Smith said advertising has not yet been affected.
United States revisions
GroupM slightly increased its forecast for U.S. ad spending growth to 3.2% from 3.1% in its mid-year report, fueled by an upward revision of projection for TV ad spending growth to 4.1% from 3.4%.
He added that there weren’t huge breakouts in election spending this year and the Olympics ad performance was normal, so there’s “not a great crater in 2017,” meaning there’s a less of a chance to get predictions wrong.
But GroupM also cut its outlook for U.S. ad growth next year to 2.6% from 3% at mid-year, citing political uncertainty and continued weak growth for domestic products globally and in the U.S.
India continues to be one of the fastest growing markets in the world, according to the report, with the country’s ad growth forecast at 13.8% this year and 12.5% for 2017. Brazil, which is emerging from a recession, is increasingly adopting digital, with mobile users up 22% in the country since the beginning of the year. Ad growth of 2% is expected for Brazil in 2017.
Credit: Ad Age