WPP-owned GroupM, the world’s largest media agency network, today released its annual forecasts for 2018 and 2019 advertising investments, predicting total global growths of 4.5 percent and 3.9 percent, respectively, thanks to marketers taking an increasing bet on digital.
In a report, GroupM said it sees an additional $24 billion in net new advertising investment this year, claiming it will be the “best annual increment since the bounce back from the global recession in 2010 when $26 billion was added.”
The network also released its final 2017 figures, reporting that investment grew by 3.5 percent, higher than the 3.1 percent prediction released in December.
Investment growth is (unsurprisingly) expected to be concentrated in digital.
GroupM predicts that 95 percent of total global investment gains will come from digital in 2018 and will expand to 99 percent in 2019. Today’s report showed global digital advertising spend reached $198 billion in 2017 and is estimated to hit $221 billion in 2018 and $243 billion in 2019.
GroupM said digital investment rose 15 percent last year, compared to an earlier prediction that forecast a 12 percent uptick. TV, on the other hand, declined by 1 percent in 2017, compared to GroupM’s earlier estimation that investment would remain flat. The network maintained that the TV category will see a 2 percent boost in 2018, helped by the “sports-assisted mini-quadrennial.”
In the report, GroupM projected that digital ad investment will grow 12 percent in 2018 and another 10 percent in 2019. That will leave digital with a total share of 39 percent, higher than the 36 percent GroupM previously forecast. In 2019, the network sees digital’s share amounting to 42 percent.
Excluding China, Facebook and Google captured 135 percent of the global growth in digital advertising investment last year, according to GroupM, lower than the 186 percent they were expected to control. GroupM noted that this figure is mitigated against the fact that the network expanded its estimates this year to include a “better representation of smaller advertisers (or the long tail of advertisers who often do not employ agencies).” GroupM also pointed out that “the line between digital and broadcast” is becoming less clear, with ad revenue from IP-delivered services of TV now being counted as digital.
Advertising’s share of global GDP “peaked” between 2004 and 2006, according to GroupM, and is estimated to decline by 0.68 percent in 2018. GroupM explained this as a partial result of big advertisers in low-growth spaces controlling costs more closely and an increasing difficulty to accurately measure digital advertising expenditures.
“We’d like to have better intelligence on the ways investment dollars are flowing to digital,” Adam Smith, GroupM futures director, said in a statement. “Digital ad revenue is reported either in whole, or by type, principally display and search, but never discriminates between large and small media owners, nor the short and long tail of advertisers who buy with or without agency support.”
Smith continued, “While the same concern applies to other media, digital is unique in its long tail being dominated by global vendors. Because digital is mostly walled gardens, a country is doing well if 20 percent of its digital ad investment is properly categorized.”
GroupM said the U.S., China, U.K., Japan, India and the Philippines (in that order) are the world’s biggest growth contributors.
In the U.S., GroupM found 60 percent of total ad investment is in digital. U.S. ad investment is projected to only increase by 3.7 percent in 2018 and 2.2 percent in 2019, lower than the IMF World Economic Outlook, which increased its nominal GDP forecast for the country to growths of 5.3 percent and 4.9 percent, respectively, in April.
China’s media investment is expected to climb 6.8 percent in 2018 and 6.6 percent in 2019, while the U.K. is anticipated to see increases of 6.1 percent in 2018 and 5.1 percent in 2019. GroupM predicted that the U.K.’s 2017 rise of 6.4 percent was a peaking point. The network admitted figures in this report were determined on the eve GDPR went into effect so forecasts for the U.K. are subject to change.
GroupM added in the report that it sees out of home securing a 6.3 percent share of global ad investment in both 2018 and 2019, helped by the rising popularity of digital OOH. The network said that’s the largest share OOH will control since 1999. GroupM projected print, including magazines and newspapers, will hold a 13 percent share in 2018 and 12 percent in 2019.