GroupM forecasts ad spends to reach $560 billion by 2015

MUMBAI: WPP’s GrpupM is out with its biannual ‘This Year, Next Year’ report forecasting the global advertising investments.

As per the report the ad spends will reach $534 billion in 2014, a 4.5 per cent increase over 2013. The company predicts investments in 2015 rising an additional 5 per cent to $560 billion.

In further says that globally, ad recovery is localised, with 17 markets accounting for 93 per cent of expected ad growth in 2014. Even at its moderate 3.4 per cent rate of ad investment growth this year to $162 billion, the US contributes fully one-quarter of incremental ad dollars. China ranks second as it climbs a predicted 9.8 per cent to $76 billion. Other countries making the cut include Nigeria, Kenya and Vietnam.

“Many companies are still operating with very strong balance sheets,” said GroupM Global president Dominic Proctor. “Coupled with a rising general confidence and a specific comfort around digital marketing, though notwithstanding some geo-political uncertainty, we are seeing an uplift in some of the ‘older economies’ as well as the new.”

Of marketplace performance, ‘This Year, Next Year’ report editor Adam Smith stated, “Despite the slowdown in China's general economy from 2012, its consumer economy continues to expand. This, plus intensive digitisation of advertising, keeps China ad investment rising at or near double-digits, with no large print legacy to correct.”

It is a different story in Western Europe, where 73 per cent of the regional economy is in the Eurozone, where demand remains suppressed by debt, internal imbalances and deflationary politics. In real terms, the Eurozone remains 20 per cent below its 2007 advertising peak, and the hardest-hit 'periphery' of Greece, Ireland, Spain, Italy and Portugal, 47 per cent below the peak.1

Smith added, “Western Europe, however, is the most-digitised ad region in the world; though this may finally be maturing to judge by digital ad investment growth slowing from double- to high-single digits in 2014 and 2015.”

Western Europe also has the world's most print-heavy advertising, though here too, the downward adjustments to annual advertising investment are moderating from double- to mid-single-digits in 2014 and 2015.    

Elsewhere, GroupM notes that some members of its south-east Asia group (Indonesia, Malaysia, Thailand, Philippines, Singapore and Vietnam) face political and economic challenges, and this year will collectively slip from double- to mid-single digit ad growth.

“This group will still contribute to the global ad recovery, but we are on alert for central banks ‘tightening into the downturn’ if inflation becomes a problem,” said Smith.

India, Brazil and Russia remain among the faster-growing ad markets, though GroupM warns that its reduced Russia forecast – from an annual run-rate of 10 per cent to 6 per cent -- depends on no worsening in domestic affairs. 

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