Carat: Global ad-spend up 4.5% in 2017
March 31, 2016
Carat, the global media network, has published its first forecast for worldwide advertising expenditure in 2017, showing positive global outlook led by the continued investment in Digital media spending.
Based on data received from 59 markets across the Americas, Asia Pacific and EMEA, Carat’s latest global forecasts highlights that advertising spend will reach US$538 billion in 2016, accounting for a +4.5 per cent year-on-year increase. Fuelled by high-interest media events taking place during the year – including the US presidential elections, Rio 2016 Olympics and Paralympics and the UEFA EURO 2016 championship the positive outlook for 2016 is predicted to continue into 2017, with Carat’s forecast highlighting a consistently strong year-on-year global advertising growth of +4.5 per cent.
Carat’s latest forecasts reconfirm the rise of Digital as the established driver of global advertising spend growth. Powered by the upsurge of Mobile (+37.9 per cent), Online Video (+34.7 per cent) and Social Media (+29.8 per cent) in 2016, the strength of Digital is expected to continue to grow at double digit prediction levels of +15 per cent this year, and a further +13.6 per cent in 2017. Overall, Carat predicts the upsurge of Digital to account for 27 per cent of advertising spend in 2016 and extend significantly to 29.3 per cent in 2017, reaching $161 billion globally.
In 2015 all regions reported positive growth, from Western Europe at +2.8 per cent, +4.3 per cent in North America, +3.6 per cent in Asia Pacific and Latin America at +11.0 per cent. Regional confidence is predicted to continue in most regions in 2016, despite volatility in some individual markets. In 2016, the North American advertising market remains strong with a solid growth of +4.6 per cent, with the upcoming presidential elections solely expected to generate $6 billion advertising spend in the US. Western Europe’s sustained positive recovery driven by solid growth in the UK and Spain in 2015 is expected to continue in 2016 and 2017 at +3.1 per cent. Despite a decline in global growth forecasts due to China and Brazil’s economic volatility, Asia Pacific and Latin America advertising markets remain strong in 2016, achieving +4.4 per cent and +10.5 per cent year-on-year growth respectively. Carat also reports an encouraging outlook for 2017 across all regions including Central & Eastern Europe, as Russia’s economy is expected to stabilise from 2016.
By media, Digital continues to be the star performer for growth level globally with Hong Kong & Estonia now joining the list of 12 markets where Digital is now the principle media used based on spend. The US, Germany, Taiwan and Austria are predicted to join this list in 2018. Whilst Digital is constantly closing the gap, TV continues to command the majority of market share with a steady 42.0 per cent in 2015 and spend is predicted to grow by +3.1 per cent this year as the Olympic Games and US elections are predicted to generate significant TV viewership across various markets. In addition, Carat’s forecasts reconfirm the steady decline in Print* in 2016 and into 2017 with Newspapers declining by -5.4 per cent and Magazines by -1.7 per cent in 2016 whilst highlighting positive year-on-year growth in 2016 for all other media, including Outdoor (+3.4 per cent), Radio (+2.2 per cent) and Cinema (+2.8 per cent), with the latter expected to grow further at +5.0 per cent in 2017.
Commenting on the Carat Advertising Expenditure forecasts, Jerry Buhlmann, CEO of Dentsu Aegis Network, said: “Carat’s latest advertising forecast and its first analysis of the 2017 landscape gives us reinforced optimism for global advertising spending. Whilst economic volatility has impacted some major markets, solid growth has been maintained globally, with stability foreseen for this year and next. The strength of Digital continues to be the dominant element in the growth of the global advertising expenditure whilst TV spend remains as the foundations of our industry. As advertising becomes more data-driven and complex, it’s crucial to move rapidly to navigate and meet the needs of the digital economy and this is reflected in the innovative capabilities and approach we provide to our clients.”
Despite declining slightly year-on-year, Television continues to command the highest share of global advertising spend, with a predicted 41.4 per cent in 2016 and 40.7 per cent in 2017. Even though audiences tend to consume media on a growing number of other platforms, TV remains the dominant mass medium holding the majority of share. TV advertising spend is forecast to grow moderately by +3.1 per cent in 2016 supported by major media events including the US presidential elections, the UEFA EURO 2016 football championship and the Rio 2016 Olympics and Paralympics. Growth in TV advertising spend is estimated to continue at a moderated pace of +2.9 per cent in 2017.
In line with expectations, Digital continues to show the highest growth rates, estimated at +15.0 per cent in 2016 and +13.6 per cent in 2017, outpacing our previous predictions in the September 2015 report. By 2017 Digital spend is forecast to reach $161 billion. Digital is clearly the established driver of global advertising market growth, with all other media types showing a low single digit increase or decline. Digital is the leading media type in 12 out of the 59 markets analysed, with the addition of Hong Kong and Estonia since our September 2015 report and with the US, Austria, Germany, Taiwan predicted to join this list by 2018. Driving the consistent growth of Digital globally is Mobile. Spending in this channel is forecast to grow by +37.9 per cent in 2016 and +30.1 per cent in 2017. The key drivers of this considerable increase in mobile investment include the dramatic shift in time spent on mobile amongst smartphone and tablet empowered consumers, the increasing reliance on the app economy, as well as the improving targeting opportunities that this channel provides.
Growing time spent on Mobile is largely linked to consumption of Online Video, Social Media and messaging. Online Video is expected to grow globally by +34.7 per cent in 2016 and by +31.2 per cent in 2017 with notably strong growth in the US market, a predicted +44.7 per cent in 2016. The rise of mobile-first social media and messaging apps such as Instagram and Snapchat (alongside Facebook and Twitter), is stimulating advertiser interest as they offer the opportunity to build native video campaigns centred around their target audience’s unique social data.As a result, each Social platform is focusing on video, opening up multiple options for brands and advertisers to create, curate and monetise content.
Globally Social Media spend is forecast to grow by +29.8 per cent in 2016 and +25.2 per cent in 2017, with the US predicted to have the highest Social Media growth at +49 per cent in 2016 and +45 per cent growth in 2017. Social media platforms are consistently improving their ability to gather data and provide marketers with actionable insights. This data can be utilised to deliver messages to a more specific audience than ever before. Overall, marketers are using Social Media as a way to deliver owned media content, not just paid ads. Branded content as a form of advertising is increasingly becoming a more prevalent component of social media investment.