GroupM, WPP’s media investment group, today updated its 2018 and 2019 ad investment forecasts.
GroupM slightly downgraded 2018 growth expectations from 4.5 per cent to 4.3 per cent. As well, 2019 growth projections are also whittled from 3.9 per cent to 3.6 per cent, with total new investment anticipated to reach $US19billion instead of the $23 billion earlier predicted.
Stress on the auto category stood out in feedback from GroupM’s worldwide network, as did the absence of any rebound in CPG investment with traditional media. These views and more are discussed in This Year, Next Year, GroupM’s twice yearly look at worldwide media investment trends authored by Futures Director, Adam Smith.
“GroupM’s still strong but slightly fraying 2018 view ties to macro questions: tighter money, China’s slowing growth, and the potential for pricey trade wars,” said Smith. “Real interest rates are edging up globally, but serious potential problems remain limited to a fragile five — Argentina, South Africa, Brazil, Turkey and Venezuela.”
When it came to the Australian market, the report predicted:
- Adspend in Australia to reach $A17.2 billion in 2019 – growth of 4.4 per cent.
- For 2018, ad spend is expected to reach $16.5 billion – growth of 5.6 per cent.
- Australia is the eighth largest market in the world and one of 10 countries expected to provide 83 per cent of all ad spend growth in 2019.
- Just two channels – regional TV and print – expected to see decline in 2019.
- Total TV is set to return to growth for the first time since 2013 is expected to grow 1.2 per cent in with AVOD delivering greatest growth.
- Total digital is expected to grow eight per cent with the greatest growth coming from display advertising.
- Growth in outdoor is expected to slow in 2019.
- There is also a chart showing share of media by channel.
- The top five categories with the biggest growth in spend are computers (+24 per cent), accommodation, gambling/gaming (+18 per cent), communications (+16 per cent) and appliances (+16 per cent).
- The four categories with the biggest falls in spend are pharmaceuticals (-17 per cent), real estate (-10 per cent), insurance (-7 per cent) and motor vehicles (-6 per cent).
GroupM forecasts that 10 countries will provide 83 per cent of all 2019 growth.
China remains the largest contributor, but 2019 will be its sixth successive year with single-digit ad growth and mark its lowest growth yet recoded.
Still, its $US90 billion ad market is second only to the USA, and has doubled since 2010. Despite rapid consumerisation, China’s advertising intensity peaked at 0.78 per cent of GDP in 2006 and has trended down to a prospective 0.67 per cent in 2019.
Ranked second, the U.S. is experiencing good macroeconomic indicators like lower unemployment and improved consumer confidence, but increasing energy prices, rising interest rates, and low unemployment have many concerned about the potential for increased inflation on top of a yawning deficit. Marketers continue to scrutinise digital investment with emphasis on verification and value.
Ranked third, India is expected to contribute $US1.35 billion of growth. This is roughly the same as Australia’s, Russia’s and Brazil’s combined growth, even though India’s total ad economy is a mere quarter of the others’ combined heft. India’s 14 per cent ad investment growth is rooted in seven per cent real consumer spending growth.
Japan is fourth. Japanese advertising has tracked ahead of its GDP in the post-Lehman cycle with media spending per capita picking up sharply since 2016. The 2020 Olympics and a surge in biddable media are powering tailwinds, but a 2019 consumption tax rise from eight per cent to 10 per cent and Japan’s belated confrontation with value, viewability and verification in digital supply chain are foreseeable headwinds.
A resilient UK is fifth. Despite fears of Brexit calamity and consumer fatigue, advertising investment remains propelled by massive advertising digitisation (61 per cent of predicted investment in 2019), and GroupM’s UK forecast remains buoyant. This is partly because of the market’s characteristic flexibility. In an emergency, advertisers know they can turn off the tap.
Concerning the new forecast, GroupM’s CEO, Kelly Clark said, “Worldwide advertising investment grows slowly but marketing has never moved faster. Automation proliferates; cycles accelerate; talent grows more mobile. The gap between the cost of failure and the value of success grows wider. For advertisers, this underscores the importance of a world view and trusted partners who can help their brands perform where the growth can be found.”