WPP’s GroupM has trimmed its 2016 global ad expenditure forecast and shared its initial outlook for 2017.
The 2017 ad volume prediction of $US552 billion (up 4.3 per cent YOY), when combined with other marketing services, pushes total marketing services expenditures worldwide past the $1 trillion threshold for first time. However, slowing growth in China and Brazil this year drive GroupM to revise down their 2016 growth estimate to 4.0 percent from the 4.5 percent earlier predicted, (net new investment of $US 22 billion trimmed to $US 20.5 billion).
In regards to the Australian market, GroupM noted:
• That the recent federal election or the Olympics are not expected to have a dramatic impact on ad spends as in previous years.
• The profitability of the major TV networks will remain an issue as viewing habits shift to video and catch-up.
• Spend on mobile search and display is predicted to double in the next five years.
• Investment in digital will continue to play dividends for OOH players.
• While increased competition from streaming is a factor, radio growth is predicted as networks invest in talent, content and social media.
GroupM’s YOY change predictions for Australian media categories.
GroupM China reports a “new normal;” 2016 growth is now forecast at 6.6 percent, revised downward from 9.1 percent as the slowdown in fixed investment and profits affects consumer demand.
After a slow growth 2015, the communications market in Brazil is feeling the effects of economic crisis in 2016, but is still hopeful of ending the year positive for growth at 1 percent. Prior optimism for 7 percent growth in 2016 was dashed by Brazil’s continuing economic recession, increasing unemployment (topping 10 per cent), and political turmoil.
With the slowing of China, GroupM believes that the United States will again be the leading contributor of global ad growth this year, assuming a mantle China has held since 2007. GroupM’s U.S. advertising growth estimate for 2016 is revised up from 2.7 percent to 3.1 percent, driven primarily by a healthier TV marketplace that will grow 3.4 percent in 2016 instead of the 2.3 percent earlier predicted. Political, CPG and Pharmaceutical categories are key contributors to TV’s strength.
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