GroupM downgrades 2013 global ad spend

MUMBAI: Due to the continuing sluggishness in the US and European economies, the global ad spend in 2013 will grow by 4.5 per cent, as per GroupM’s revised forecast.

The study revealed that the forecast is almost a full percentage point lower than the 5.3 per cent spending hike GroupM predicted in June.

The 70-country forecast predicted that global ad spending in 2013 will increase 4.5 per cent compared to 2012, representing $531 billion.

The revised spending forecast was made in GroupM’s biannual worldwide report, “This Year, Next Year,” which also concluded that 2012 ad spending in measured media will hit $508 billion, a 4.6 per cent increase over 2011 spending of $486 billion.

For the U.S. market, the report said advertising investment in measured media grew 3.5 per cent in 2012 to $152.4 billion, up from $147.2 billion the previous year.

For 2013, the new report predicted a less optimistic 2.7 per cent increase to $156.5 billion.

GroupM chief investment officer Rino Scanzoni said, “Ad spending in 2013 won’t enjoy the boost from Olympic and election-year spending we saw in 2012. At the same time, overall economic conditions in the US do not support more than very moderate advertising spending expansion.”

GroupM Futures Director Adam Smith said ad investment in the Eurozone periphery (Greece, Ireland, Italy, Portugal and Spain) is expected to fall 15 per cent this year, a 40 per cent contraction from its peak spending year of 2007 and comparable in real terms to 1998 spending levels.

“Western Europe is the slowest region for ad spending growth, with a 2.6 per cent contraction expected in 2012, the worst year since 2009‘s 11 per cent collapse. Western Europe now accounts for 20 per cent of global advertising, down from 30 per cent in 1999 and heading for 17 per cent in 2017,” Smith added.

Smith also said that Russia and Turkey continue to lead ad spending growth in central and Eastern Europe, a regional economy that is one-fifth the size of Western Europe but with twice the ad spending growth.

The study is part of GroupM‘s media and marketing forecasting series drawn from data supplied by parent company WPP‘s worldwide resources in advertising, public relations, market research, and specialist communications.

The report predicted that investment in digital media would account for 19.5 per cent of measured ad spending globally this year ($99 billion) and 21.4 per cent in 2013 ($114 billion), with respective growth rates of 16 per cent and 15 per cent. Those figures are comparable to the GroupM forecast made earlier this year.

“Digital ad growth remains strong, sustained and structural, though one or two highly-digitized European markets now look for growth in usage as opposed to new users,” said Smith. “More newsworthy is our rising dependence on digital to support total growth, now furnishing over 60 per cent of new incremental ad dollars in 2012 and 2013. This produces a reciprocal reduction in TV’s contribution, being the only other large growth medium.”

In other media categories, TV accounted for 43 per cent of measured global media investment in 2012, the same amount recorded for the previous year.

“We continue to predict TV‘s share of global ad budgets peaking in 2012 at 43 per cent as other screens begin to claim meaningful amounts of consumer time,” Smith added.

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