Carat Adspend Report SEPTEMBER 2016
Digital Spend to Dominate Growth in 2017 & Hit US$168.2 Billion
Carat publishes its updated forecasts for worldwide advertising expenditure, showing a positive outlook for the global advertising market in 2016, set to continue in 2017 powered by the ongoing growth of Digital.
Based on data received from 59 markets across the Americas, Asia Pacific and EMEA, Carat’s latest global forecasts show that advertising spend will reach US$548.2 billion in 2016, accounting for a +4.4% year-on-year growth. The healthy outlook is fuelled by a buoyant 2016, marked by high-interest media events including the UEFA EURO championship, the Rio 2016 Olympics and Paralympics, as well as the upcoming US presidential elections.
In 2016, Carat reports a positive outlook for most regions with particularly robust growth in North America (+5.0%) and strong recovery in Russia (+6.2%), countering lower expectations in some markets. The US continues to show positive market confidence with forecasts revised up to +5.0% as the US presidential elections alone are expected to generate US$7.5 billion of incremental spend. Despite a slight moderation following the EU referendum, the UK continues to be the largest advertising market in Western Europe, with positive growth of +5.4% expected in 2016, exceeding the average rate of +2.9% in the region. Advertising forecasts are also set to remain strong in Latin America and Asia Pacific, with +10% and +3.9% growth respectively in 2016, in spite of Brazil’s lower expectations and China’s adjustments to its ‘new normal’ economic landscape.
Despite a slight decline due to volatility in some markets, the positive momentum of the global advertising spend is expected to continue into 2017 reaching US$570.4 billion, a +4.0% year-on-year growth, led by the ongoing upsurge of Digital media. As the leading media type in 13 of the markets analysed, Digital continues to grow at double-digit prediction levels of +15.6% in 2016, accelerating further at +13.6% in 2017. Driven by the high demand of Mobile, Online Video and Social Media, Digital media spend is expected to reach 27.7% share of total global media spend in 2016, increasing to a predicted 30.2% in 2017.
Whilst TV continues to hold the highest share of total media spend of 41.1% in 2016 - boosted by high-interest media events - it is expected to grow at a more moderate rate of +2.3% in 2017 with a lower predicted share of spend at 40.3%.
In line with expectations, Print advertising spend is forecast to continue to decline by -5.5% in 2016 and by -4.3% next year. Excluding Print, Carat’s forecasts reconfirm year-on-year growth for all other media in 2016, highlighting year-on-year positive growth in Cinema (+4.5%), Radio (+2.4%) and OOH (+3.5%), with predictions slightly revised down for 2017.
China, the world’s second largest advertising market, is expected to reach US$81.8 billion spend this year. Following many years of double-digit economic expansion, China is now experiencing a more moderate growth, reflected in a steady +5.7% ad spend forecast for 2016. As the market has now entered a ‘new normal’ era, its advertising spend is predicted to increase at a similar rate of +5.5% in 2017. Other insights on the Chinese advertising landscape include:
- TV still commands the majority share of total spend in China, a predicted 53.4% share in 2016 and 51.2% in 2017. However, with fierce competition from Digital and moderate year-on-year growth (+1.7% in 2016 and +1.3% in 2017), TV’s share of total spend in China shows a negative trend falling by between 1 and 2% points a year since 2010.
- Digital is the second largest media type in China with 25% share of total spend predicted in 2016 and high performing double-digit growth of +25.9% in 2016 and +21.4% in 2017.
- Mobile is driving total Digital spend growth with a forecast increase of +47.1% in 2016 and +34.6% in 2017. With more than 656 million smartphone users in China in 2016, Mobile is forecast to reach over a third (34%) of total Digital spend in 2017.
- Online Video is expected to increase by a rapid +42.3% in 2016 and +34.5% in 2017 as the use of professional generated content grows exponentially in the market.
- OOH, the third largest media type in China, is predicted to increase at a solid +4.1% in 2016 and +3.8% in 2017, with China’s metro development and airports as key growth drivers.
- In contrast, Print continues to show consecutive year-on-year declines with Newspapers expected to slump by -14.9% in 2016 and -16.2% in 2017, and Magazines by -12.2% in 2016 and -13.1% in 2017.
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