Carat Predicts Positive Outlook in 2016 With Global Growth of +4.7%

22/09/2015

Carat today publishes its updated forecasts for worldwide advertising expenditure in 2015 and 2016, with continued optimism through positive global and regional outlook and solid growth in Digital and Mobile. Based on data received from 59 markets across the Americas, Asia Pacific and EMEA, Carat’s latest global advertising expenditure forecasts that global advertising spend will grow by +4.0% in 2015 to US$529billion, a slight decline from the +4.6% predicted in March 2015, and 2016 is predicted to grow by +4.7%, accounting for an additional US$25billion in spend.

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After four years of a stalled advertising market, Australia is predicted to return to positive growth in 2015. Advertising expenditure in 2015 is forecast to increase by +2.4% to reach AUD 13.6 billion. Forecasts for 2015 have been revised upwards from the +1.0% previously forecast in the March 2015 report to +2.4%, with economic conditions in Australia showing signs of improvement and subsequently being reflected in consumer and business behaviours. The improved market sentiment that started in the first six months of 2015, is expected to continue through 2015 and into 2016 when a further expansion of the advertising market is predicted at +2.8% rate.

From a regional perspective, Carat confirms on-going positive momentum in 2015 for most regions although volatility occurs in some individual markets, with Western Europe at +2.6%, +4.2% in North America, +4.1% in Asia Pacific and +12.7% in Latin America. Western Europe’s continued positive growth is driven by solid 2015 figures in the UK and Spain of +6.4% and +6.9% respectively, strong enough to withstand the political turmoil in Greece and its revised advertising growth this year of -12%, significantly down from the +8% predicted in March 2015. Despite a slight decline in growth forecasts due to China’s economic downturn, Asia Pacific remains strong in 2015 with an above global spend rate of +4.1%, driven by high-performing India at 11% and growing Australia at 2.4%. Carat’s data also reports an encouraging outlook for 2016, with all regions predicted to increase year-on-year spend next year and Central & Eastern Europe to return to positive growth.

Fuelled by the rise of Mobile and Online Video spending trends, Carat’s latest forecasts reconfirm the continued solid growth for Digital media, evident through the upsurge in the predicted share of advertising spend in 2015 of 24.3% and 26.5% in 2016. For 10 of the markets analysed, including Australia, the UK, Ireland and Canada, Digital is now the principle media used based on spend, with the US market predicted to join this list in 2018 when digital advertising spend is forecast to overtake TV advertising by more than US$4billion.

By media, Digital continues to be the only channel warranting double digital growth, predicted at +15.7% in 2015 and +14.3% in 2016. This is driven by the high demand for Mobile and Online Video advertising especially across social media, with 51.2% and 22% year-on-year growth expected this year. Programmatic buying is also experiencing rapid growth at a rate of +20% each year. TV remains resilient with a steady 42.7% market share in 2015 and is predicted to grow by more than +3% in 2016, as the upcoming Olympic Games and US elections are expected to drive considerable viewership. Despite the ongoing decline in Print* spend, Carat’s forecasts confirm year-on-year growth for all other media with updated predictions for 2015 highlighting year-on-year growth in Cinema at +4.7%, Radio at +1.3% and Outdoor at +3.4%, with the latter two slightly revised down from March 2015 figures.

Commenting locally on the Carat Advertising Expenditure forecast, Simon Ryan, CEO Carat Aus & NZ, said:

"For the Australian Market, it is encouraging to see a return to positive growth this year with a 2.4% increase to reach AUD $13.6billion and a further expansion in 2016 at +2.8%.

There is a clear and absolute focus that Digital media is driving growth as its share of total advertising spends continues to inflate year on year and Digital is now the leading media in Australia. Digital Display is the rising star driven substantially by Online Video, Programmatic and Mobile. With cross-device measurement tools becoming more sophisticated and access to premium content increasingly available, greater investments from linear TV budgets are being allocated to digital screens.

We are experiencing a significant change in market sentiment and consumer confidence which started in the first 8 months of 2015 and is expected to be in play well into 2016. This will be further accelerated by spending on elections for Federal Government, Australian Capital Territory and Northern Territory and the Rio Olympic Games in August 2016. Significant and major new product launches led by leading advertising categories including Automotive, Retail, Banking and Telecommunications will also see continued growth in the Australian advertising market in 2016, all driving growth of around est. 2.8% on annual spend.”

Commenting on the Carat Advertising Expenditure forecasts, Jerry Buhlmann, CEO of Dentsu Aegis Network, said:

“Carat’s latest advertising spend forecast shows optimism balanced with realism during a year of increased volatility in major markets such as Russia and China. Noticeably, the landscape is becoming increasingly complex as previously grouped markets, such as the BRIC economies, are now operating differently and economic situations can quickly change markets at pace. Our teams are well positioned to navigate our clients through this multifaceted marketplace and successfully assimilate new market opportunities at speed.

“Digital media continues to achieve outstanding growth as the effectiveness of this medium and results achieved, especially with millennials, warrants the upsurge in spend levels. As Digital rapidly evolves into a more established asset and Programmatic and Search bring stronger performance and efficiency, we continue to add value to our clients by delivering innovative solutions that are different and better.”

 

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