Dentsu Aegis Network upwardly revises global ad spend growth forecast to 5% in 2014 & 2015

Driven by huge spends by political parties, in India, the advertising market is to see a +8.7% y-o-y growth in 2014. Growth is to continue into 2015 at +9.0% as advertisers embrace new technologies within Digital

e4m by exchange4media Staff
Updated: Sep 12, 2014 11:58 AM
Dentsu Aegis Network upwardly revises global ad spend growth forecast to 5% in 2014 & 2015

Dentsu Aegis Network has come out with its updated forecasts for worldwide advertising expenditure in 2014 and 2015, with market optimism demonstrated through strong global and regional forecasts.

Based on data received from 59 markets across the Americas, Asia Pacific and EMEA, Dentsu Aegis Network’s latest forecast show overall global advertising revenues accelerating by +5.0 per cent in 2014, an increase on the +4.8 per cent predicted in March 2014, and reaffirming positivity for 2015 with year-on-year growth predicted at+5.0 per cent.

From a regional perspective, Dentsu Aegis Network predicts further positive momentum in 2014 for North America and Western Europe, compared with figures announced in March 2014. The US continues to show strong on-going market growth, with levels of advertising spend in North America expected to exceed the pre-recession peak in 2007 for the first time by the end of 2014. Western Europe is predicted to see a return to positive growth of+2.7 per cent after two consecutive years of declining advertising spend, driven by a strong UK advertising market forecast to grow by a robust +7.5 per cent this year.

  Year on year % growth at current prices
2014 2015
GLOBAL 5.0 (4.8) 5.0 (5.0)
NORTH AMERICA 4.9 (4.3) 4.5 (4.5)
USA 4.9 (4.3) 4.6 (4.6)
CANADA 3.3 (3.8) 3.1 (4.1)
WESTERN  EUROPE 2.7 (1.8) 2.5 (2.1)
UK 7.5 (5.0) 4.7 (4.5)
GERMANY 1.0 (1.0) 1.5 (1.5)
FRANCE -0.9 (0.8) 0.2 (1.0)
ITALY -1.3 (-1.3) 0.9 (1.4)
SPAIN 2.6 (2.3) 3.3 (3.4)
C&EE 3.5 (5.0) 4.6 (5.2)
RUSSIA 3.9 (8.0) 5.0 (7.0)
ASIA PACIFIC 5.4 (5.6) 5.9 (5.9)
AUSTRALIA 0.1 (2.1) 0.9 (1.9)
CHINA 7.6 (8.0) 7.9 (8.3)
INDIA 8.7 (8.7) 9.0 (9.8)
JAPAN 2.0 (1.7) 1.7 (1.7)
LATIN AMERICA 12.1 (12.8) 11.8 (12.9)
BRAZIL 9.4 (10.0) 8.1 (8.1)
  Figures in brackets show our previous forecasts from Mar 2014

Whilst forecasts show a slight decline in growth when compared with predictions from March 2014, Asia Pacific and Latin America are still both forecast to outperform global predictions, with growth rates for 2014 of +5.4 per cent and 12.1 per cent, respectively, and the only regions to see double digit growth in some markets. Dentsu Aegis Network’s data also highlights that the outlook for 2015 continues to be encouraging with all key markets forecast to return to positive growth.

In India, the success of Narendra Modi-led NDA in the elections in Q2 2014 has driven buoyancy in the market and there is an upswing in the mood of the country. Overall advertising spend is predicted to see a spike in 2014 driven by huge spends by the political parties. The advertising market is to see a +8.7 per cent year-on-year growth in 2014. Growth is to continue into 2015 at +9.0 per cent as advertisers embrace new technologies within Digital. The Cricket World Cup is also predicted to bring about higher investments from advertisers.

Print media was the biggest beneficiary of the political party spends, and unlike other markets, newspaper spend will grow by +6 per cent in 2014. Newspapers are still the most popular media type in India with 37 per cent share of total media spending.

Digital media spend in India is the third most popular media type behind newspapers and TV, and it is forecast to grow by +33.2 per cent this year, with growth driven by mobile and programmatic trading. Advertisers are increasingly thinking ‘mobile first’.

Mobile internet access is almost equal to desktop internet usage in India, and the importance of mobile in the coming years will grow. With the upcoming launch of 4G services across India later this year, the opportunity for advertisers is huge.

 

Year on year % growth at current prices

 

2014

2015

GLOBAL

5.0 (4.8)

5.0 (5.0)

ASIA PACIFIC

5.4 (5.6)

5.9 (5.9)

AUSTRALIA

0.1

0.9

CHINA

7.6

7.9

INDIA

8.7

9.0

JAPAN

2.0

1.7

INDONESIA

21.8

26.2

VIETNAM

35.2

23.9

 

Figures in brackets show our previous forecasts from Mar 2014

By media, digital outperforms previous predictions for 2014 with year-on-year growth forecast at +16.1 per cent. Digital will also increase its total share of spend, reaching 20.5 per cent in 2014 and 22.6 per cent next year, when it will outpace the combined magazines and newspaper global share for the first time. Whilst the steady decline in print is expected to continue, all other mediums are predicted to achieve year-on-year growths of approximately 3 per cent to 5 per cent in 2014 and 2015.

Commenting on the Dentsu Aegis Network advertising expenditure forecasts, Jerry Buhlmann, CEO, Dentsu Aegis Network said, “Dentsu Aegis Network’s latest advertising forecast gives us increased optimism for the outlook of global and regional advertising spend. With the global recession further behind us and a healthy trend of 5 per cent year-on-year global ad growth, there is positive momentum building across the industry.”

He further said, “Whilst digital continues to headline market trend discussions, the components within this dominant media now provide the interesting chapters, with in the opportunities in mobile leading the debate. With changes and trends in consumer behaviour driving business opportunities, brands need to deliver innovative and integrated solutions to reap the rewards ahead.”

Elaborating on the growth forecast for the Asia Pacific region, Nick Waters, CEO, Dentsu Aegis Network Asia Pacific said, “With relative political stability across the region supporting solid economic growth, large numbers of emerging consumers, and increasing access to digital communications the advertising market retains a positive outlook in Asia.”

Southeast Asia is seeing strong growth in ad spend, particularly in Indonesia and Vietnam, as disposable income of large population groups increases. With the election of Joko Widodo as Indonesia’s new President there is optimism for sustained economic growth amongst the business community which will be supportive for advertising.

As China’s rate of economic growth moderates, the ad market slows to reflect this. The large beverage, food, and real estate categories have all been negatively impacted by regulation, scandal, and cooling markets, respectively.  Despite this China is still seeing year-on-year growth of over 30 per cent in digital media. Out of home also continues to be a vibrant sector, driven by increasing digital screens and transport infrastructure investment.

Despite the recent economic slowdown in Japan following the increase in sales tax, advertising growth of 2 per cent is forecast in 2014. This has been supported by the major sporting events of the Sochi Winter Olympic Games, the FIFA World Cup, and the award of the 2020 Olympics to Tokyo. This is the third consecutive year of gains and growth is expected to continue with an increase of 1.7 per cent in 2015.

In Australia, the region’s third largest advertising economy, total expenditure is predicted to remain stagnant this year at 0.1 per cent. The major sporting events have had minimal impact on spend and current sentiment points to a cooling of consumption as households seek to reduce debt in an environment of uncertainty brought on by the Liberal Federal Government. We don’t see material acceleration into 2015.
 

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