Advertising revenue is expected to grow by 3.7 per cent globally in 2017 to USD 504 billion, according to the latest MAGNA forecast. This however shows a noticeable drop from 5.9 per cent growth rate last year due to the cyclical global sports events and U.S. elections which boosted global growth in 2016.
Digital will continue its rise and grow by 14 per cent this year while offline ad sales (television, print, radio, out-of-home) will decrease by -2 per cent. MAGNA also expects online advertising to pass the USD 200 billion mark (USD 204 billion) and lead advertising sales globally, with 40 per cent of total ad sales vs 36 per cent for TV.
Rise & rise of digital
Mobile drives growth within digital, as the majority of ad sales (54 per cent) are now generated by impressions and clicks on smartphones. MAGNA predicts mobile advertising to pass the USD 100 billion mark for the first time this year (USD 110bn).
Video and social formats will continue to drive digital advertising growth (+30 per cent or more) while paid search will grow double digit again (+13 per cent) to remain the lead format (almost half of digital ad sales).
MAGNA’s report shows that while desktop video is still showing growth at +14 per cent (unlike most other desktop formats), the engine for online video ad spend growth is mobile (+56 per cent growth expected to bring mobile share of video spend to +45 per cent this year).
Mobile video will match desktop next year as the mobile video experience, wireless broadband penetration, and mobile video content continues to improve. By 2021, online video advertising will have passed the USD 50 billion mark globally, and digital video will represent more than 20 per cent of total video viewing (TV and online video).
According to Vincent Létang, EVP, Global Market Intelligence at MAGNA and author of the report said, “The record level of growth in 2016 globally, outperforming economic growth, was caused by marketers willing to embrace the new opportunities offered by digital media (search, social, video, programmatic) on a larger scale, while anxious to preserve their share of voice on traditional linear television, despite rising CPMs costs. In 2017, both digital and offline growth will slow down. Online advertising sales will nevertheless continue to grow by double-digits in most markets (globally +13 per cent), but television ad sales will decline (-1 per cent) due to softer price increases, ratings erosion and the lack of global sports events.”
APAC: Digital to surpass TV in 2017; China & India remain steady
The advertising market for the APAC region will grow by +5.6 per cent in 2017, to USD 156 billion. This is marginally ahead of MAGNA’s previous forecast (+5.4 per cent). APAC maintains its position as the second largest region for advertising spend, behind North America’s USD 196 billion. Growth is expected to slow down slightly next year (+5.1 per cent).
MAGNA’s report also expects digital to surpass television advertising spends in 2017 with digital representing 37.8 per cent at USD 59 billion, while television’s share is 37.7 per cent of budgets. TV is still growing in APAC by +2.2 per cent this year, to USD 59 billion, and will continue to grow through 2021, despite gradually losing share to digital media.
Mobile advertising is pacing ahead of the global average in APAC, and will represent nearly 60 per cent of total digital spending this year (globally: 54 per cent). By 2021, mobile advertising will represent nearly 75 per cent of total digital advertising budgets, and over a third of total ad spending.
The driver of growth in APAC is digital advertising, but the digital share of total campaign budgets varies massively between markets in APAC. At the high end, there are countries like Australia and China, where digital represents half of budgets, as well as markets at the low end where digital is single digit share of total advertising spend (Pakistan, Philippines, Vietnam and Thailand).
China continues to be the largest market in APAC, and the second largest market globally behind the US, with RMB 415 billion (USD 62 billion) of advertising sales expected in 2017. MFor the fourth consecutive year television advertising sales will be flat, while digital media will capture all the growth (+16 per cent) to reach a 52 per cent market share (one of the highest in the world), according to MAGNA.
Australian advertising revenues are expected to grow by +4.7 per cent to AUD 16 billion this year driven by its robust economic growth and the continued expansion of the Australian digital advertising economy. Digital advertising is expected to grow by 16 per cent this year to reach AUD 8 billion, a strong follow-up to last year’s 24 per cent digital growth.
MAGNA expects Indian media owners advertising sales to grow by +11.5 per cent, slightly below previous forecast (+13.5 per cent) but in line with last year’s growth (+11.8 per cent). Online ad sales will grow by +28 per cent to reach 17 per cent of total ad revenues in India.
Gurpreet Singh, Managing Director APAC MAGNA said, “The APAC advertising economy looks relatively promising in 2017 with higher ad spend growth predicted across the majority of markets this year vs 2016. Digital continues to be the highest growth driver in the region, following the global trend. TV growth has slowed down, but it remains in demand for the majority of developing markets – we will likely see that demand slow down in the coming years as digital catches up in those markets.”