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Dentsu Aegis Network predicts higher global ad spend growth at 5%

Figures supported by strong performances by the US and the UK, with Western Europe returning to positive growth in 2014 and 2015

BestMediaInfo Bureau | Delhi | September 12, 2014

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Dentsu Aegis Network yesterday published its updated forecasts for worldwide advertising expenditure in 2014 and 2015, with market optimism demonstrated through strong global and regional forecasts.

Based on data received from 59 markets across the Americas, Asia Pacific and EMEA, Dentsu Aegis Network’s latest forecast show overall global advertising revenues accelerating by +5% in 2014, an increase on the +4.8% predicted in March 2014, and reaffirming positivity for 2015 with year-on-year growth predicted at +5%.

From a regional perspective, Dentsu Aegis Network predicts further positive momentum in 2014 for North America and Western Europe, compared with figures announced in March 2014. The US continues to show strong on-going market growth, with levels of advertising spend in North America expected to exceed the pre-recession peak in 2007 for the first time by the end of 2014. Western Europe is predicted to see a return to positive growth of +2.7% after two consecutive years of declining advertising spend, driven by a strong UK advertising market forecast to grow by a robust +7.5% this year.

While forecasts show a slight decline in growth when compared with predictions from March 2014, Asia Pacific and Latin America are still both forecast to outperform global predictions, with growth rates for 2014 of +5.4% and 12.1%, respectively, and the only regions to see double-digit growth in some markets. Dentsu Aegis Network’s data also highlights that the outlook for 2015 continues to be encouraging with all key markets forecast to return to positive growth.

Digital outperforms previous predictions for 2014 with year-on-year growth forecast at +16.1%. Digital will also increase its total share of spend, reaching 20.5% in 2014 and 22.6% next year, when it will outpace the combined Magazines and Newspaper global share for the first time. While the steady decline in Print is expected to continue, all other mediums are predicted to achieve year-on-year growths of approximately 3%-5% in 2014 and 2015.

  Year on year % growth at current prices
  2014 2015
GLOBAL 5.0 (4.8) 5.0 (5.0)
North America 4.9 (4.3) 4.5 (4.5)
         
Usa 4.9 (4.3) 4.6 (4.6)
Canada 3.3 (3.8) 3.1 (4.1)
         
Western Europe 2.7 (1.8) 2.5 (2.1)
Uk 7.5 (5.0) 4.7 (4.5)
         
Germany 1.0 (1.0) 1.5 (1.5)
France -0.9 (0.8) 0.2 (1.0)
         
Italy -1.3 (-1.3) 0.9 (1.4)
Spain 2.6 (2.3) 3.3 (3.4)
         
C&EE 3.5 (5.0) 4.6 (5.2)
Russia 3.9 (8.0) 5.0 (7.0)
         
Asia Pacific 5.4 (5.6) 5.9 (5.9)
Australia 0.1 (2.1) 0.9 (1.9)
         
China 7.6 (8.0) 7.9 (8.3)
India 8.7 (8.7) 9.0 (9.8)
         
Japan 2.0 (1.7) 1.7 (1.7)
Latin America 12.1 (12.8) 11.8 (12.9)
         
Brazil 9.4 (10.0) 8.1 (8.1)  

Figures in brackets show our previous forecasts from Mar 2014

Commenting on the Dentsu Aegis Network Advertising Expenditure forecasts, Jerry Buhlmann, CEO of Dentsu Aegis Network, said: “Dentsu Aegis Network’s latest advertising forecast gives us increased optimism for the outlook of global and regional advertising spend. With the global recession further behind us and a healthy trend of 5 per cent year-on-year global ad growth, there is positive momentum building across the industry. While Digital continues to headline market trend discussions, the components within this dominant media now provide the interesting chapters, within the opportunities in mobile leading the debate. With changes and trends in consumer behaviour driving business opportunities, brands need to deliver innovative and integrated solutions to reap the rewards ahead.”

India

The elections in Q2 2014 in India have driven buoyancy in the market and there is an upswing in the mood of the country. Overall advertising spend is predicted to see a spike in 2014 driven by huge spends by the political parties. The advertising market is to see a +8.7% year-on-year growth in 2014. Growth is to continue into 2015 at +9.0% as advertisers embrace new technologies within Digital. The Cricket World Cup is also predicted to bring about higher investments from advertisers.

  • Print media was the biggest beneficiary of the political party spends, and unlike other markets, Newspaper spend will grow by +6% in 2014. Newspapers are still the most popular media type in India with 37% share of total media spending.
  • Digital media spend in India is the third most popular media type behind Newspapers and TV, and it is forecast to grow by +33.2% this year with growth driven by Mobile and programmatic trading. Advertisers are increasingly thinking ‘mobile first.’
  • Mobile internet access is almost equal to desktop internet usage in India, and the importance of mobile in the coming years will grow. With the upcoming launch of 4G services across India later this year, the opportunity for advertisers is huge.

Nick Waters, CEO Dentsu Aegis Network Asia Pacific, commented, “Southeast Asia is seeing strong growth in ad spend, particularly in Indonesia and Vietnam, as disposable income of large population groups increases. As China’s rate of economic growth moderates, the ad market slows to reflect this. The large beverage, food, and real estate categories have all been negatively impacted by regulation, scandal, and cooling markets respectively. Despite this China is still seeing year-on-year growth of over 30% in digital media. Out of home also continues to be a vibrant sector driven by increasing digital screens and transport infrastructure investment.”

About Japan and Australia, Waters said, “Despite the recent economic slowdown in Japan following the increase in sales tax, advertising growth of 2% is forecast in 2014. This has been supported by the major sporting events of the Sochi Winter Olympic Games, the FIFA World Cup, and the award of the 2020 Olympics to Tokyo. This is the third consecutive year of gains and growth is expected to continue with an increase of 1.7% in 2015…In Australia, the region’s third largest advertising economy, total expenditure is predicted to remain stagnant this year at 0.1%. The major sporting events have had minimal impact on spend and current sentiment points to a cooling of consumption as households seek to reduce debt in an environment of uncertainty brought on by the Liberal Federal Government. We don’t see material acceleration into 2015.”

Waters further said, “Conversely, in India business and consumer sentiment is improving following Narendra Modi’s election success. The rate of advertising growth will pick up to high single-digits again following a couple of years of relatively slower growth linked to the previous government’s policy paralysis. India is the world’s fastest growing smartphone market which is driving acceleration in digital and mobile spend.”

Trends by Media:        
       
    Global year on year % growth at current prices
    2014 2015
Television   4.8 (4.8) 4.3 (4.3)
           
Newspapers   -2.5 (-1.3) -2.3 (-1.3)
           
Magazines   -1.6 (-1.2) -1.3 (-0.6)
           
Radio   3.7 (0.8) 3.0 (2.4)
           
Cinema   2.9 (3.6) 4.3 (3.7)
Outdoor   3.3 (3.4) 4.1 (3.8)
       
Digital   16.1 (15.5) 15.5 (15.3)
    Figures in brackets show our previous forecasts from Mar 2014
           

    Global % Share of Advertising Spend  
    2014 2015  
Television 43.2 (43.6) 42.9 (43.2)  
           
Newspapers 14.5 (14.8) 13.4 (13.9)  
           
Magazines 7.5 (7.5) 7.0 (7.1)  
           
Radio 6.7 (6.3) 6.5 (6.1)  
           
Cinema 0.6 (0.6) 0.6 (0.6)  
           
Outdoor 7.0 (7.1) 7.0 (7.0)  
           
Digital 20.5 (20.1) 22.6 (22.0)  
             

Figures in brackets show our previous forecasts from Mar 2014

Broken down by media, Television continues to command the highest share of advertising spend globally +43.2% this year. It has benefited the most from the sporting events, Sochi Winter Olympics and FIFA World Cup this year with a peak in year-on-year growth rates of +4.8%.

Outdoor advertising revenue growth has been driven by growth in digital OOH spend. It has seen a relatively strong year of growth this year at +3.3%, with share of spend holding steady at 7%. Radio continues to see stable moderate growth of +3.7% this year with demand for its competitive costs and flexibility ensuring it maintains its share of the advertising pie.

Radio advertising spends are forecast to increase by +3.0% in 2015. The digitalisation of Cinema has increased the flexibility and turnaround times for the medium. Growth is expected to be particularly strong in 2015 with a predicted +4.3%, supported by a strong film release schedule.

Globally, Digital media spending overtook Newspapers in 2012, but still newspapers command the third highest share of spend at 14.5%. Newspapers are however seeing a decrease in share by on average 1% point year-on-year, with Newspaper share of spend predicted to fall to 13.5% in 2015. Year-on-year steady declines in Newspaper advertising spending continues with a predicted -2.5% in 2014 and -2.3% in 2015. It is a similar story for Magazines, although year-on-year declines in ad spend have been less severe, -1.6% in 2014 and -1.3% in 2015. Share of Magazine advertising spend is falling by on average half a percentage point year- on-year with share at 7.5% in 2014 contracting to 7.0% in 2015. Print publishers continue to invest strongly in digital platforms, offering their titles via several touch points, however so far digital revenues have not be able to make up for lost traditional print revenues.

It is Digital media spend however which has been increasing in leaps and bounds. Its share of spend at 22.6% in 2015 is forecast to overtake Newspaper and Magazines combined share of spend (20.4%). Digital’s share of total spend has been increasing by on average 2% points each year with double digit growth rates year after year, the forecast is +16.1% for 2014 and +15.5% in 2015. Growth is driven by Mobile, Online Video and Social Media.

Mobile (including tablet) advertising was slow to take off, but has now become a very significant part of digital advertising spend, largely driven by Google and Facebook, who collectively account for an estimated 70% of all global mobile ad spend. Mobile has grown reflecting the greater amount of time people are spending on mobile devices, as mobiles have become more essential to people’s lives.

Faster connection speeds have helped video to become a hugely important part of people’s online behaviour. The rise of video has seen video ads become more accepted online, and now most YouTube videos are accompanied by advertising, with 75% of the in-stream ads now skippable. Facebook is also actively selling video ads, and has recently allowed them to play automatically on desktop and mobile. As other publishers like Buzzfeed and Vice get more actively into video Dentsu Aegis Network expects this to continue to grow quickly.

Info@BestMediaInfo.com

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