India to become 7th-largest ad market by 2025; growth forecast for 2022 unchanged at 22.1%: GroupM

GroupM has released its This Year, Next Year Global 2022 Mid-Year Ad Forecast. According to the report, the ad growth forecast for 2022 in India is relatively unchanged at 22.1%, while many markets are now expected to grow by mid-to-high single digits. 

The report stated, “There is also significant potential for long-term expansion still in place in India, where the population is broadly similar in size compared to China, but India’s advertising market is less than one-tenth of China.  

On current estimates, India is positioned to rise from its position as the world’s tenth-largest market to become the seventh-largest — ahead of Canada, Australia and Brazil — by 2025. 

The report stated that halfway through the year, global ad spends is expected to grow by 8.4%, down from the 9.7% it had forecasted in December 2021. The growth forecast excludes the impact of the US political advertising, which is expected to reach $13 billion this year — up from $12 billion in 2020 (underlying growth).

France, Germany, Brazil and Canada are expected to grow by high single digits. The US, Australia and the UK are likely to grow by mid-single digits. The ad growth in China is expected to grow by low single digits.

“Increased consumer price inflation in the markets we cover is expected to average nearly 7% this year, sparking fears of recession. However, we don’t see a perilous economic state. Underlying (“real,” or inflation-adjusted) growth should outpace that of 2019, even if some parts of the world do end up experiencing an economic downturn,” the report read. 

GroupM has reduced its 2022 forecast mainly due to the deceleration in China, which accounts for 20% of the global ad market. The ad market in China is expected to grow 3.3% this year, down from the 10.2% original forecast. China’s ad market is impacted due to strict Covid-19-related lockdowns in the first half of the year.

Within APAC, the ad forecast is revised to 5.7% versus the 9.3% estimate, although as China represents 56% of the region, relative weakness in China is a drag on the APAC total. Excluding China, regional growth is now forecast to be 9.0%, compared to 8.1% previously. Japan, still the world’s third-largest advertising market, is forecast to grow at a faster pace than previously anticipated, and without the benefit of a broadly inflationary economy (consensus expectations per Refinitiv call for CPI increases of 2.5% this year — low globally, although high by Japanese standards, of course). 

The top five sellers of advertising in 2021, included Google, Facebook, Alibaba, Bytedance and Amazon, generating $408 billion in ad revenue, or 53% of the global total. Ten years earlier, in 2011, the top five advertisers would have included Google, Viacom and CBS, News Corp and Fox, Comcast and Disney. 

Digital

Pure-play digital advertising platforms should grow by 11.5% on an underlying basis during 2022 versus the previous 13.5% forecast. Overall, digital advertising on pure-play platforms (not including spending by advertisers on digital extensions of traditional media and excluding US political advertising activity) represents 67% of the industry’s total this year and should amount to 73% in 2027.

TV

Meanwhile, after recovering during 2021 with double-digit growth, television appears poised to produce more limited, if still solid growth (excluding the impact of US political advertising) with a 4.4% gain for the medium overall during 2022. 

The global Connected TV+ advertising is estimated to amount to $21 billion in 2022, up by 24% over 2021 and accounting for 12% of all TV globally.

Outdoor

Out-of-home is on track to reach 12% growth by the end of the year as many markets are expected to exceed pre-pandemic levels.

Print and Magazines

Growing number of brands appreciate the importance of this channel as social and cultural consciousness becomes more prevalent in media buying. Concurrently, publishers have diversified their digital offerings to include podcasts, and experiential and improved audience matching capabilities that help to ensure viability and long-term growth, especially for publishers with a national or global orientation. Audiences are therefore robust and available across a much larger spectrum of platforms. However, the broader factors causing the decline previously — heightened competition from digital platforms in particular — will continue to weigh on the sector, and many individual publishers that continue to effectively harvest their businesses (i.e., focusing on drawing cash out rather than investing more in) will constrain results for years to come.

The report concluded, “Looking at the competitive environment this year and next, it’s becoming clear that the largest streaming services are expanding their global reach, and major digital publishers and platforms are likely to seek global uniformity of their businesses rather than piecemeal changes related to fragmented national and state-based privacy regulations. While global scale offers marketers easier access to a larger pool of audiences, there will still be challenges to face. US- based streaming services are entering foreign markets and are positioned to take share from national players. The limited advertising opportunities within streaming services coupled with the overall decline of linear television viewing means marketers should consider defining and setting new goals for the medium of TV as it may become less able to cost-effectively satisfy reach and frequency-based marketing goals. Even as individual advertising channels are becoming more digital in nature, diversification remains an important tool in every marketer’s toolbox.”

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