GroupM predicts strongest growth in ad spend for eight years

Global advertising spend will grow by 4.5% this year but only 3.9% in 2019 with Google and Facebook continuing to dominate the market, according to the latest outlook from GroupM.

The company predicted there will be US$24b in net new advertising investment this year, the best annual rise since the bounce back from the global recession in 2010 when an additional $26B was spent by marketers.

Growth this year climbed to 3.5%, higher than the 3.1% earlier predicted.

Digital will again capture the growth, accounting for 95% of new investment in 2018 and 99% in 2019.

GroupM said $198b was spent on digital advertising in 2017, a rise of 15% and three percentage points higher than the 12% forecast in December.

Growth of 12% is predicted in 2018 and 10% in 2019, taking total expenditure to $221b and $234b respectively.

Digital’s share for 2018 will rise to 39%, up from the 36% percent GroupM earlier predicted, before climbing further to 42% in 2019.

Excluding China, Facebook and Google captured 135% of the growth in digital advertising investment in 2017 according to GroupM’s analysis.

But the report offered a glimmer of hope for other vendors, with the agency saying the domination was not quite as total as previously predicted.

“While still a tough story for other digital media vendors, this is lower than we expected,” the report said. “GroupM anticipated that these two companies would account for 186% of digital’s growth, but this is mitigated by GroupM’s expanded estimate of the total digital market with better representation of smaller advertisers (or the long tail of advertisers who often do not employ agencies).”

The US, China, UK, Japan, India and the Philippines are the biggest growth contributors globally.

The Philippines was described as “by far” the largest of the ASEAN ad economies with per-capita investment of $60, double the regional average.

Meanwhile, GroupM noted that advertising’s share of global GDP has declined from a peak of 0.85% between 2004 and 2006 to 0.68% forecast for 2018.

While big advertisers controlling costs more closely in low growth environments in partially to blame, as are younger consumer economies where per-capita advertising investment is lower, measurement is also a major factor, the report said.

Among the issues include what GroupM said are the under measurement of digital advertising expenditures and “difficulty quantifying the long tail of advertisers — the number one source of advertising growth”.

Futures Director Adam Smith said: “We’d like to have better intelligence on the ways investment dollars are flowing to digital. 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.

“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% of its digital ad investment is properly categorized.”


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