Dentsu Inc.'s overseas subsidiary, CARA, has conducted its periodic revision of global advertising expenditure growth rate forecasts.

 

■Key Points

Global Advertising Expenditure Growth Rate for 2016 (Revised from March 2016 Forecast)
・Global advertising market growth in 2016 is projected to be 4.4% year-on-year, down 0.1 percentage points from the March 2016 forecast. This would bring global advertising spending in 2016 to $548.2 billion, an increase of $23 billion from the 2015 actual figure.

・By region: North America is projected to grow slightly higher than the previous forecast at 5.0%. Western Europe, impacted by the UK's Brexit, is expected to grow 2.9%, 0.2 percentage points lower than the previous forecast. Central and Eastern Europe, benefiting from continued V-shaped economic recovery, has been significantly revised upward from the previous forecast of 2.2% growth to 4.7%. Asia-Pacific is projected to grow by 3.9%, 0.5 percentage points below the previous forecast, partly due to negative growth expected in Hong Kong, Taiwan, and Thailand. Latin America is also projected to grow by 10.0%, 0.5 percentage points down from the previous forecast of 10.5%, partly due to a delayed economic recovery in Brazil.

・In this advertising expenditure forecast covering seven media types, the trend continues where growth in digital media offsets the decline in print media, which is projected to experience negative growth. Digital advertising expenditure is expected to grow by 15.6% year-on-year. However, television advertising expenditure is projected to maintain the largest share, accounting for 41.1% of total advertising expenditure. The share of digital advertising is forecast to reach 27.7%.

2017 Global Advertising Expenditure Growth Rate (Revised from March 2016 Forecast)
・The global advertising market in 2017 is forecast to grow by 4.0%, a downward revision of 0.5 percentage points from the 4.5% growth projected in March 2016. Global advertising spending in 2017 is expected to reach $570.4 billion, an increase of $22.2 billion compared to 2016. Digital advertising spending growth is expected to account for $20.1 billion of this projected increase, representing approximately 90% of the total growth.

・By medium, television advertising expenditure continues to hold the largest share, projected to account for 40.3% in 2017. Meanwhile, the share of digital advertising expenditure is expected to reach 30.2%, driven by the accelerating digital shift evident in the growth of mobile, online video, and social media advertising.

・Regionally, the global advertising market in 2017 is expected to be positive worldwide despite the absence of major events like those in 2016. North America is projected to grow by 3.8% (previous forecast: 4.0%), Western Europe at 2.7% growth (previous forecast: 3.1%), Central and Eastern Europe at 5.5% growth (previous forecast: 4.0%), Asia-Pacific at 4.2% growth (previous forecast: 4.7%), and Latin America at 9.8% growth (previous forecast: 12.1%). All regions are projected to experience positive growth.

■Regional Breakdown

North America
・The United States, the world's largest advertising market, is projected to grow 5.0% in 2016 (previous forecast: 4.7% growth) to $204.8 billion (equivalent to 37.4% of global advertising spending), supported by campaign effects from the presidential election and the Rio de Janeiro Olympic and Paralympic Games. In 2017, without major events, digital advertising will continue to drive growth, with a stable 3.8% increase expected.

・In the U.S., television advertising spending is projected to increase by 4.0% in 2016, remaining the largest medium accounting for 38% of total advertising spending. The share of television advertising spending is forecast to be 37.3% in 2017.

・U.S. digital advertising is expected to grow 16.7% year-on-year in 2016, driven by mobile and video. Digital advertising's share of total advertising spending is projected to reach 27.8% in 2016 and 30.5% in 2017.

・Canada's advertising market, similarly to the US, is expected to be driven by digital advertising, growing by 3.0% in both 2016 and 2017, exceeding the 2.5% growth achieved in 2015.

Western Europe
・Western Europe, which returned to positive growth after 2014, is expected to see stable growth of 2.9% in 2016 (previous forecast: 3.1%) and 2.7% in 2017 (previous forecast: 3.1%). The region's advertising market in 2016 will reach $94.4 billion (equivalent to 17.2% of global advertising spending). The main reason for the downward revision from the previous forecast is the UK's Brexit issue. Consequently, the UK's advertising market growth rates for 2016 and 2017 have been revised downward from 6.2% to 5.4% and from 5.7% to 4.6%, respectively.

・Countries expected to lead growth in 2016 are the UK, Ireland, Sweden, Spain, and Greece. Conversely, France and the Netherlands are projected to see low growth, while Finland, Switzerland, and Norway are expected to experience negative growth.

・Germany will continue its steady market growth. Following a 2.3% increase in 2016 (previously forecast at 1.8%), growth is expected to reach 2.1% in 2017 (previously forecast at 1.7%).

・France's advertising market experienced negative growth for four consecutive years. However, positive factors, including hosting the UEFA European Football Championship in 2016, have shifted the trend towards growth. As a result, positive growth is forecast for both 2016 and 2017.

・Italy's advertising market performed well in the first half of 2016, aided by the impact of international sporting events. However, the economic recovery slowed somewhat in the second half. With no major events scheduled for 2017 and economic conditions remaining uncertain, advertising market growth is projected to be 1.3% in 2016 (previous forecast: 1.2%) and 0.8% in 2017 (previous forecast: 0.9%).

・Spain's advertising market was in a severe state until 2014 but has since recovered, growing by 6.6% in 2015. Growth is projected at 5.0% in 2016 (previously forecast at 5.3%) and 4.4% in 2017 (previously forecast at 4.6%). These figures represent downward revisions from previous forecasts, reflecting the impact of political instability on the economic outlook.

Central and Eastern Europe
Central and Eastern Europe experienced negative growth of 3.0% in 2015, but is expected to make a V-shaped recovery in 2016 and 2017. This recovery is underpinned by the resurgence of Russia, the region's largest advertising market, which had previously been expected to experience prolonged low growth due to persistently low oil prices and geopolitical instability. Consequently, forecasts for the Russian market in 2016 and 2017 have been significantly revised upward (2016 revised from 0.2% growth to 6.2% growth, 2017 revised from 3.5% growth to 5.2% growth).

・Beyond Russia, countries driving advertising market growth in the region in 2016 include the Czech Republic (9.0% growth), Lithuania (8.1% growth), and Romania (6.0% growth).

Asia Pacific
・Asia Pacific has seen modest downward revisions for both 2016 and 2017, but continues to project solid growth (2016: 4.4% growth → 3.9% growth; 2017: 4.7% growth → 4.2% growth). Strong performers like India (12.0% growth), Vietnam (10.6% growth), the Philippines (9.9% growth), and Australia (5.4% growth) offset the sluggishness seen in Hong Kong (11.8% decline), Taiwan (7.6% decline), and Thailand (5.2% decline). Given differing economic conditions across countries, we expect this variation in growth rates to persist through 2017.

・For China, the world's second-largest advertising market, the 2016 advertising expenditure forecast has been revised downward slightly from the previous projection of 5.8% growth to 5.7% growth, reflecting economic conditions. This brings the projected 2016 market size to $81.8 billion. Growth of 5.5% is also anticipated for 2017 (previous forecast: 5.7% growth). By media type, television advertising, which holds the top share, is projected to grow by 1.7% in 2016 and 1.3% in 2017. Digital advertising, benefiting from strong mobile advertising driven by smartphone adoption and expansion, is expected to maintain high growth, increasing by 25.9% in 2016 and 21.4% in 2017.

・India also continues its high growth, becoming the world's fastest-expanding advertising market. With the popular Cricket World Cup being held in the country, advertising spending is forecast to grow by 12.0% in 2016 and 13.9% in 2017, sustaining double-digit growth against the backdrop of high economic growth rates.

・Japan, the world's third-largest advertising market, is expected to see continued moderate growth. While positive effects are anticipated from sporting events like the Rio de Janeiro Olympics and Paralympics and the FIFA World Cup qualifiers, the impact of the Kumamoto earthquakes, sluggish personal consumption, and the absence of pre-tax hike demand following the consumption tax increase postponement means 2016 growth is forecast to remain at 1.8%, unchanged from the previous forecast. Furthermore, for 2017, positive growth is anticipated to continue (previous forecast: 1.1% growth, current forecast: 1.2% growth), driven by expected marketing activities for the 2020 Tokyo Olympics and Paralympics and the effects of government economic measures. By medium, television, which holds the top share, is expected to see moderate growth (2.0% growth in 2016, 1.8% growth in 2017). Digital media, the second-largest share, is projected to achieve high growth, with 9.0% growth in 2016 and 8.0% growth in 2017.

Latin America
・Although the 2016 growth rate for Latin America as a whole has been slightly revised downward from the previous forecast (10.5% increase → 10.0% increase), the growth rate remains high, with the region's advertising market projected to reach $26.9 billion. Argentina, where inflation is expected to boost advertising market growth, is projected to achieve double-digit growth for the second consecutive year (40.9% growth in 2016, 31.9% growth in 2017). Mexico is also forecast to grow steadily (3.6% growth in 2016, 4.3% growth in 2017). Colombia is projected to experience negative growth in 2016, declining by 1.0%, but is expected to recover in 2017, growing by 0.4%.

・Brazil's advertising market: Although the Rio de Janeiro Olympics and Paralympics are expected to have a positive effect, growth rates for 2016 and 2017 have been revised downward, taking into account the impact of the perceived economic slowdown and political instability on the market (2016: 6.8% growth → 4.8% growth; 2017: 8.4% growth → 4.5% growth).

End

(Note) Carat independently analyzes and estimates advertising expenditure growth rates across 59 regions based on information gathered through its global network. Media covered include television, newspapers, magazines, radio, cinema advertising (cinema ads), outdoor/transport advertising, and digital.

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Dentsu Inc. News Release
http://www.dentsu.co.jp/news/release/2016/0908-009028.html