GroupM forecasts China as the largest source of ad growth
China remains the largest single source of ad growth, accounting for 37 per cent of new dollars in 2013 and a prospective 31 per cent in 2014 according to the GroupM worldwide media and marketing forecasts This Year, Next Year.
This is a high level for China by past standards, says the report. China is a surprisingly mature ad market. Advertising already accounts for 0.75 per cent of GDP, which is on the global average, but must be among the highest in the world expressed as a percentage of China’s relatively small consumer economy. Another indicator of China’s ad maturity is digital’s 24 per cent share of measured media investment in 2013, in line with the Western Europe average. Another sign of maturity is that advertising’s share of GDP has barely changed since 2008.
GroupM therefore expects the pace of advertising investment growth in China to match GDP, which remains around 10 per cent annually.
The overall GroupM outlook for 2014 shades downwards from +5.1 per cent in the summer to +4.6 per cent this time and remains vulnerable to a wider economic downside. According to GroupM, the obvious ailments include Washington gridlock, Eurozone austerity and three-wheel-drive Japan stimulus. In advertising, 2013 is another weak year of recovery.
The USA remains the number-two contributor of new ad demand by virtue of its size rather than its dynamism. Measured US advertising has fallen as a share of US GDP from a peak of 1.24 per cent in 2000 to 0.93 per cent in 2013: Western Europe has experienced comparable shrinkage. In 2013 we expect the USA to add 17 per cent of new dollars and in 2014, 19 per cent.
The UK is the world’s fourth-largest ad market (after the USA, China and Japan) and the third-largest contributor to ad growth in 2013 and 2014. Forecast to turn in growth of 7 per cent in 2013 and 6 per cent in 2014, its ad market has suddenly recovered its pre-crisis size (in nominal terms, anyway) in the wake of successive incremental improvements in economic indicators. These do not however include wage growth, and household finances remain generally precarious, with increased consumer demand financed by less saving and more debt.
Japan is a big contributor by virtue of size and to a degree its improving economy. “Abenomics” faces a test when sales tax rises 3 per cent in April, the prospect of which causes us to pull our forecast of 2014 ad growth back from +2.8 per cent to +1.6 per cent this time.
Read more about GroupM’s This Year, Next Year report.
