Carat predicts robust momentum into 2017 with +4.5% increase in Global Advertising Spend
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Digital Leads Growth to Attain 29% Market Share & $161 Billion Advertising Spend in 2017
Carat, the leading global media network, today publishes its first forecast for worldwide advertising expenditure in 2017, combined with its latest forecasts for 2016 and actual figures for 2015, showing positive global outlook led by the continued investment in Digital media spending.
Based on data received from 59 markets across the Americas, Asia Pacific and EMEA, Carat’s latest global forecasts highlights that advertising spend will reach US$538 billion in 2016, accounting for a +4.5% year- on-year increase.
Fueled by high-interest media events taking place during the year – including the US presidential elections, Rio 2016 Olympics and Paralympics and the UEFA EURO 2016 championship – the positive outlook for 2016 is predicted to continue into 2017, with Carat’s forecast highlighting a consistently strong year-on- year global advertising growth of +4.5%.
Carat’s latest forecasts reconfirm the rise of Digital as the established driver of global advertising spend growth. Powered by the upsurge of Mobile (+37.9%), Online Video (+34.7%) and Social Media (+29.8%) in 2016, the strength of Digital is expected to continue to grow at double digit prediction levels of +15.0% this year, and a further +13.6% in 2017.
Overall, Carat predicts the upsurge of Digital to account for 27.0% of advertising spend in 2016 and extend significantly to 29.3% in 2017, reaching US$161 billion globally.
In Australia, the +2.5% growth in advertising spend in 2015 over the previous year is forecast to continue in 2016 to reach $13.7billion by the end of the year. This modest improvement in conditions follows the change in Government in September 2015 and the improved sentiment of the electorate, both from businesses and consumers.
The falling of the local currency has also fuelled growth in the tourism sector, a big employer in the country, and that has been reflected in Retail sales. Growth predictions in 2016 are marginally below the +2.8% forecast in September 2015, due to the uncertainty associated with the China slowdown affecting the Australian commodity sector and financial market turbulence.
Current forward booking volumes indicate a slow start in Q1 2016, however with a Federal and Olympic year, advertising spend is expected to grow from Q2 2016 onwards to reach our full year forecast of +2.5% growth for 2016.
In absence of major media events, current expectations are for a slight slowdown of the 2016 momentum in 2017, when the advertising market in Australia is expected to remain positive but at a marginally reduced growth rate of +2.3%. Overall, Carat predicts a gradual but incremental return to growth of the Australian advertising market over the next few years.
By media, Digital continues to be the star performer for growth level globally with Hong Kong & Estonia now joining the list of 12 markets where Digital is now the principle media used based on spend. Whilst Digital is constantly closing the gap, TV continues to command the majority of market share with a steady 42.0% in 2015 and is predicted to grow by +3.1% this year as the Olympic Games and US elections are predicted to generate significant TV viewership across various markets.
+61 3 9693 8122 www.carat.com.au @CARATAUNZ CaratAustralia Emerald House I Level 1, 105 York Street I South Melbourne, VIC 3205 I Australia
In addition, Carat’s forecasts reconfirm the steady decline in Print* in 2016 and into 2017 with Newspapers declining by -5.4% and Magazines by -1.7% in 2016 whilst highlighting positive year-on-year growth in 2016 for all other media, including Outdoor (+3.4%), Radio (+2.2%) and Cinema (+2.8%), with the latter expected to grow further at +5.0% in 2017.
| YEAR ON YEAR % GROWTH AT CURRENT PRICES | |||
| 2015 | 2016f | 2017f | |
| GLOBAL | 3.9 (4.0) | 4.5 (4.7) | 4.5 |
| NORTH AMERICA | 4.3 (4.2) | 4.6 (4.5) | 4.0 |
| USA | 4.4 (4.3) | 4.7 (4.5) | 4.0 |
| CANADA | 2.5 (2.5) | 3.0 (3.0) | 3.0 |
| WESTERN EUROPE | 2.8 (2.6) | 3.1 (2.9) | 3.1 |
| UK | 6.0 (6.4) | 6.2 (5.5) | 5.7 |
| GERMANY | 1.8 (1.6) | 1.8 (1.7) | 1.7 |
| FRANCE | -0.3 (0.1) | 0.6 (0.7) | 1.0 |
| ITALY | 1.0 (0.5) | 1.2 (0.7) | 0.9 |
| SPAIN | 6.6 (6.9) | 5.3 (6.9) | 4.6 |
| C&EE | -3.0 (-6.0) | 2.2 (1.6) | 4.0 |
| RUSSIA | -9.8 (-14.0) | 0.2 (0.0) | 3.5 |
| ASIA PACIFIC | 3.6 (4.1) | 4.4 (4.7) | 4.7 |
| AUSTRALIA | 2.5 (2.4) | 2.5 (2.8) | 2.3 |
| CHINA | 6.0 (6.0) | 5.8 (6.5) | 5.7 |
| INDIA | 11.0 (11.0) | 12.0 (12.0) | 13.9 |
| JAPAN | 0.3 (1.4) | 1.8 (1.6) | 1.1 |
| LATIN AMERICA | 11.0 (12.7) | 10.5 (13.6) | 12.1 |
| BRAZIL | 7.8 (6.0) | 6.8 (8.4) | 8.4 |
| Figures in brackets show our previous forecasts from September 2015 |
Commenting locally on the Carat Advertising Expenditure forecast, Simon Ryan, CEO Dentsu Aegis Network and Carat, Australia & NZ, said:
“Overall, 2015 was a record year for advertising, with media spends up 5.1% YOY from 2014. This was the best YOY growth since 2010 according to SMI.”
“Towards the end of 2015, growth did slow with December clocking in at 0% growth. January 2016 achieved a modest growth of 1%; by the end of February the year was building momentum to achieve a forecast 2% growth with continued improvement anticipated throughout this year.”
“The Carat Ad Spend forecast for total advertising market growth in 2016 is 2.5%. This growth is largely due to election-related spending in the first half, boosted further by activity associated with the Olympics in the third quarter.”
“Highlights of growth in 2016 are Online ad spend achieving 41.7% share of total ad spend, making Australian advertisers the second highest investors in online; second only to the UK. Online display is the fastest growing digital sector, forecast to grow 14% in 2016, to achieve 34.4% share of total online investment.”
“Out of home advertising is growing to 6.5% share of total ad spend, chasing Radio on 7.8% share of total ad spend. It is expected to overtake radio in 2019.”
“I expect 2017 to continue steady growth at a slightly lower rate of 2.3% without the booster effect of the Federal Election-related spending and the usual lag effect caused by the Olympics in 2016.”
“It’s great to be part of a growing market along with strong economic conditions that fuel growth and continue to build on a sound media spend platform in Australia.”
Commenting on the Carat Advertising Expenditure forecasts, Jerry Buhlmann, CEO of Dentsu Aegis Network, said:
“Carat’s latest advertising forecast and its first analysis of the 2017 landscape gives us reinforced optimism for global advertising spending. Whilst economic volatility has impacted some major markets, solid growth has been maintained globally, with stability foreseen for this year and next.
The strength of Digital continues to be the dominant element in the growth of the global advertising expenditure whilst TV spend remains as the foundations of our industry. As advertising becomes more data- driven and complex, it’s crucial to move rapidly to navigate and meet the needs of the digital economy and this is reflected in the innovative capabilities and approach we provide to our clients.”