Leading advertising and digital communications group Dentsu Aegis Network released its biannual global forecasts, pointing to a more positive 2018 for Asia Pacific advertising expenditure than previously expected.
Ad-spend growth will rise from 4.0% in 2017 to hit 4.5% in 2018 – higher than the 4.2% forecast in January 2018 and taking total investment to USD 215.95 billion. Regional events such as the 2018 World Cup will be held in Russia, 2018 Winter Olympics South Korea, Asian Games in Indonesia and Australian federal election will play an important role in stimulating growth.
Geographically, Asia Pacific is a major growth region, contributing 41% of the global increase (USD 613.5 billion). Comparatively, North America accounts for 32%, Western Europe accounts for 13% with Latin America at 8% and Eastern Europe 5%.
Commenting on the latest forecasts, Nick Waters, CEO of Dentsu Aegis Network Asia Pacific, said, “The region as a whole displays a positive outlook with increasing growth rates. We are seeing upward revisions in most key markets, with India, the Philippines and Vietnam showing high rates of growth. Spend in China continues to grow at pace, though driven almost entirely by the ecommerce platforms, Alibaba, Tencent and Baidu. Digital remains the dominant growth area with a quarter of Asia Pacific advertising spend expected to be delivered through mobile for the first time. Digital will be the leading form of advertising in half of the markets that we track in the region.”
Speaking on the Indian context, Kartik Iyer, President- Media Brands and Amplifi – Dentsu Aegis Network India said, “India’s ad spend is projected to grow at 10.5% as compared to the beginning of the year when the growth was expected to be over 11%. Digital continues its rapid growth (31.9%) with online video –gaining in share. This has been driven largely by the availability of high speed connectivity across the country, it is only set to grow faster. TV with a projected market share of 39.1 % continues to lead the media share of pie with Print at 29.3%. It wouldn’t be a surprise to see some forward thinking brands trying to use Video Instead of TV in a few test and learn cases.”
Key market trends
· India: India advertising spend market is expected to grow in 2018 by 10.5% to reach 624 billion rupees. Though there had been a slow start in Q1-2018, the market was picking up from March-April, fueled by a stable recovery post demonetization/GST/RERA buoyed by the State Elections in Meghalaya, Tripura, Nagaland and Karnataka in April. The India South Africa Match in January, Budget announcement in February, lead to continued expansion and growth of regional newspapers and television. Both social and online video will see growth for the next five years as India continues to evolve their internet, mobile, cloud audience.
· China: China’s advertising market is predicted to grow 6.5% in 2018, up from the previous forecast of 5.4%, to reach RMB 630 billion – 16.2% of global ad investment. Growth will be driven by digital, which is forecast to command 60% of advertising spend and increase by 14.8%. The online giants Baidu, Alibaba and Tencent (BAT) are projected to contribute around 80% of this growth, underlining their dominance of the marketplace. Mobile payments are also one to watch in the coming years as platforms such as WeChat or Alipay make cash obsolete in large parts of the country.
Australia: Australia advertising spend is forecast to show continued growth in 2018, increasing by 2.8% to reach AUD 15.7 billion. The main driver of growth will be election related advertising which includes a boost in advertising by the governments involved as a means to promote the great things they have done during their time in power. In 2018 we expect more than 40% of growth to come from this sector and a further 40% to come from Gambling, Retail and Finance advertising. Digital media is expected to increase by 6.1% in 2018, representing 48% share of the total media spend, which could be a result of brand safety issues where advertisers and media owners look to more autonomy and control of their content.
The changing face of TV
Television ad spend is forecast to return to a modest growth rate of 1.2% in 2018, following a decline of -0.7% in 2017. Growth will be driven primarily by sporting and political events. A further positive increase of 1.1% is predicted in 2019. Television ad spend is forecast to evolve and have a modest recovery, driven by new tech developments such as Addressable TV and Connected TV. Addressable TV is beginning to gain strength, reaching almost 65 million households in the US. This means that advertisers can deliver different ads to different households as they watch the same programme in the hope to have a higher ROI. TV viewing also gets more connected. Activities undertaken on a connected TV include Broadcaster catch-up services, clips through websites (e.g. Facebook and YouTube) and Online Subscription services (e.g. Netflix, Amazon).
Streaming digital video on TV has become a daily habit in the US, with 78% of Hulu’s viewership occurring on TV. The decline in linear TV viewing is being replaced by other activities taking place on the TV set, with tech assisting this. TV is forecast to remain a powerful media platform commanding US$213.2 billion in ad spend in 2018.
Traditional media: digital disruption continues
Newspaper and print
Traditional media spend is forecast to decline in 2018 by -0.5% and by -0.4% in 2019. Traditional Newspaper spend declined by -9.4% in 2017, but in 2018 the rate of decline is forecast to improve -7.5% revised up from -7.9% previously forecast.
However, the share of Newspaper spend will decrease by 1% to 8.1% in 2018 and 7.2% in 2019. Despite good overall audiences, especially due to digital consumption and the demand for high-quality print content, the consumption shift towards digital media has not been fully monetized by media owners. Publishers are investing and preparing their data offering to improve their digital business performance and allow for programmatic buying across media and in real time. Defensive consolidation is also apparent, witnessed through mergers between press groups like Gravity and Skyline in France.
The downward trend in Magazine spend continues with ad spend growth forecasts of -6.5% in 2018 and -6.4% in 2019, with share of spend declining by on average 0.5% year-on-year to reach 4.5% in 2019.
Out-of-home
Out-of-home (OOH) has benefited from significant technological innovation in recent years. Digital displays across all formats have transformed the medium. OOH is forecast to grow by 2.2% in 2018 and 2.1% in 2019 to hit US$37.7 billion—a 6% share of total global spend.
Radio
Radio’s digital offering is growing. The uptake of home assistant devices, such as Amazon Echo and Google Home, has opened up different possibilities in how listeners interact with audio advertising. Radio is forecast to grow by 2.0% in 2018 and 1.2% in 2019 to reach US$37.3 billion—a 6% share of total global spend.
Cinema
Cinema continues to receive just 0.6% of total global spend, however year-on-year growth is strong with 5.9% growth forecast in 2018 and 5.2% in 2019. Digital is changing the way we engage with cinema, with an emerging trend towards on-demand screening. For example, the Chinese video-streaming giant iQiyi has launched its first on-demand, brick-andmortar movie theatre with many more planned across the country.
Global Media trends
Mobile on the go
The mobile device is steadily becoming our primary point of access to all digital services and content. In 2018, 52.2% of all worldwide online traffic was generated through mobile phones, up from 50.3% in the previous year, according to Statista. People now spend an unprecedented amount of time on their smartphones—more than five hours a day, according to some estimates. This growth in usage is largely driven by the widespread availability of high-quality digital Video. Mobile Video consumption is exploding among all age groups and content categories. 9 in 10 Social media users opt for mobile browsing, with mobile apps accounting for 70% of time spent on Social media.
Reflecting this, mobile is forecast to represent a quarter of global ad spend 25.2% this year exceeding the previous prediction of 24.8%. With Mobile payments forecast to be more popular in the coming years, Mobile is set to continue on a positive growth trajectory a forecast 23.3% in 2018 and 18.8% in 2019.
Digital still calls the tune
Worldwide Digital media spend is forecast to increase by 12.6% in 2018, more than three times the rate of all media (3.9%), to reach US$230.6 billion—a US$25.7 billion incremental increase year-on-year. Online Video (+24.6%) and Social Media (+21.6%) are particularly strong. Paid Search continues to account for the largest share of digital (39%). As previously predicted, Digital will overtake TV for the first time this year to account for 38.4% share of total ad spend vs. 35.5%.
In the US, Digital spend is forecast to overtake TV in 2019. Programmatic ad spend is expected to grow by 23.2% in 2018 and 19.1% in 2019 as the ability to consolidate programmatic buying strategies across formats and devices continues to be an opportunity for advertisers to reach the most valuable audiences at scale.
Traditional media spend is forecast to decline by just -0.5% in 2018 and -0.4% in 2019. Newspapers and magazines are expected to continue their downward trend, with falls of -7.5% and -6.5% respectively. Radio (+2.0%), Out of Home (+2.2%) and Cinema (+5.9%) spend are expected to show steady growth.
TV spend is forecast to move back into growth in 2018 (+1.2%), following a -0.7% decline in 2017, remaining a major medium in the mix with 35.5% of overall investment.
10 ad spend take-aways
1.Our latest global ad spend forecasts point to a modest recovery, with growth accelerating from 3.3% in 2017 to 3.9% in 2018—amounting to a global spend of $613.5 billion.
2.We’ve upgraded our mid-year growth forecast for 2018 from 3.6% to 3.9%, reflecting a more positive outlook globally. Contribution to new global ad dollars in 2018 is driven in particular by the United States and China, accounting for around one third and one quarter of new growth, respectively.
3.Global ad spend is forecast to grow at 3.8% in 2019—an outlook consistent with 2018’s performance, despite the lack of significant sporting and political events to drive growth.
4.Digital continues to drive growth and is forecast to increase by 12.6%–over three times the rate of all media in 2018. Video growth on mobile-first social platforms will be the biggest driver for digital with Video (24.6%), Mobile (23.3%) and Social Media (21.6%) all seeing the highest increases in 2018.
5.Digital overtakes TV for the first time this year and will account for 38.4% of total ad spend vs. 35.5% for TV, as the shift towards online video, subscriber video-on-demand and catch-up services continues.
6.Paid Search’s share of global spend is projected to overtake Print (Newspaper and Magazine) spend for the first time in 2018.
7.Mobile ad spend is forecast to represent a quarter of global ad spend (25.2%) in 2018, exceeding the previous prediction of 24.8%.
8.Television ad spend is forecast to return to modest growth of 1.2% in 2018, following a decline in spend of -0.7% in 2017. Growth will be driven primarily by sporting and political events (e.g. FIFA World Cup, US mid-term elections). Television ad spend is forecast to continue on a positive growth trajectory (1.1% in 2019), driven by new tech developments such as Addressable TV and Connected TV.
9.Programmatic ad spend is expected to grow by 23.2% in 2018 and 19.1% in 2019 as the ability to consolidate programmatic buying strategies across formats and devices continues to be an opportunity for advertisers to reach the most valuable audiences at scale.
10.Traditional media spend is forecast to decline in 2018 by -0.5% and by -0.4% in 2019. Print spend continues to decline in 2018 and 2019, but the rates of decline will not be as high as in recent years. All other media types are expected to show moderate growth driven by technological innovations e.g. Digital Out-Of-Home, Digital Radio and Digital Cinema