Although the news headlines paint a picture of a world in upheaval, with every day throwing out a new surprise, the advertising market has been remarkably stable. In our latest Advertising Expenditure Forecasts we have held our forecast for global adspend growth this year at 4.5 per cent, unchanged since June.
Some markets have strengthened (notably Canada and the UK), but these have been counterbalanced by markets that have weakened, particularly the Middle East and North Africa (MENA). Our forecast for 2019 is also unchanged at 4.2 per cent growth, while we have reduced our forecast for 2020 from 4.3 per cent growth to 4.2 per cent. Growth will therefore remain within the four to five per cent range it has maintained since 2011.
Economic growth has picked up this year in Canada and the UK, and demand from advertisers has been stronger than expected, so we have revised our forecast for adspend growth in Canada this year from 3.8 per cent to 5.6 per cent, and in the UK from 0.7 per cent to 2.4 per cent. These two revisions alone will add US$581m to the global ad market this year. We have also made substantial upward revisions in Vietnam (US$131m), France (US$121m), and Taiwan (US$104m). Western Europe is the most improved region, revised up from 2.3 per cent growth in 2018 to 2.6 per cent growth.
After conducting new research into true levels of expenditure in MENA, we have thoroughly revised our estimates of historic ad expenditure in the region. Our estimate of regional adspend is now higher than it was previously, but so too is our estimate of the shock the region has suffered from the drop in oil prices since 2014, political turmoil and conflict. We now consider that adspend shrank by 40 per cent between 2014 and 2017, more than our previous estimate of 33 per cent. But we estimate that ad expenditure across MENA totalled US$3.6bn in 2017, ahead of our previous figure of US$2.4bn. We now forecast an average annual decline of 5.5 per cent to 2020, well below our previous forecast of 1.4 per cent average annual decline.
We forecast that two thirds of all the growth in global advertising expenditure between 2017 and 2020 will come from paid search and social media ads. Over this period, total spending will increase from US$86bn to US$109bn on paid search, and from US$48bn to US$76bn on social media. Paid search will grow by US$22bn over this period, while social media will grow by US$28bn, making it the single biggest contributor to growth.
Paid search has undergone constant development in recent years. Search platforms, agencies and brands are applying ever more sophisticated artificial intelligence techniques to improve targeting, messaging and conversion. Search is becoming more integrated with commerce, both online – as brands shift budgets to ecommerce platforms – and offline, as retailers use location and store inventory data to match active shoppers directly with the products they’re searching for. All these developments are attracting higher performance budgets from brands, often new expenditure rather than being diverted from brand awareness activity. Overall we expect them to drive an average of eight per cent annual growth in paid search adspend between 2017 and 2020.
Much of the recent rapid growth in social media advertising has come as platforms have replaced static ads with more engaging video ads. So far these social video ads have acted more as complements to television ads than competitors, but the platforms are now competing with television more directly by hosting long-form content like sport, drama and comedy, and inserting mid-roll ads like those seen in television breaks. Overall we expect social media adspend to grow by an average of 16 per cent a year to 2020, twice the rate of paid search.
The fastest-growing traditional medium is cinema, which we forecast to grow by 16 per cent a year thanks to rapidly rising admissions in China. It is a tiny medium, though, representing just 0.8 per cent of total adspend this year. Otherwise outdoor is the strongest performer, with 3 per cent annual growth. Outdoor is benefiting from its wide reach and ability to create mass awareness, which allows it to complement highly targeted online advertising for premium brands. While targeted online ads move buyers along the path to purchase, premium brands still need to create widespread awareness among non-buyers – a premium brand will only remain one if everyone recognises its premium value.
More like this
Native advertising is gaining ground and favour among advertising campaigns, making up a growing part of overall revenue. These gains are expected to continue over the next three years as fully integrated advertising campaigns continue their onward ascent.17th Dec 2018 Insight News
View and download the speaker presentations from the FIPP Insider in London, 12 December 2018.17th Dec 2018 Insight News
A UK collaboration between Dennis, Immediate, Bauer and Haymarket has picked up the top award at the 2018 FIPP Insight Awards presented at FIPP Insider London on 12 December 2018. Gold award winners included Sanoma Media Netherlands, MPA - the US Association of Magazine Media and Magnetic, UK.12th Dec 2018 Insight News
This year has seen a dramatic increase in the financial importance of native advertising. For the third year in a row, we’re proud to present the findings of our annual global study, in cooperation with the Native Advertising Institute covering native advertising trends in the magazine industry.5th Dec 2018 Insight News
From titles changing hands at accelerating speed as media companies race to consolidate and capture larger audiences within their focus markets, innovating to adapt to the demands of new platforms and diving into AI - these were some of the major publishing industry trends identified by by James Hewes, president and CEO of FIPP at the FIPP Insider event in London today.12th Dec 2018 Features
Following what judges described as the most competitive year since FIPP and UPM’s Rising Stars Awards started in 2015, the Rising Stars winners were announced last night at the FIPP Insider event in London. In addition, three companies were awarded for the high standard of their entries this year.13th Dec 2018 Rising Stars
The last decade has been a fascinating one for women's mainstream media. Established titles have undertaken the shift from print to digital and in some instances have pioneered new ways of engaging their audiences.10th Dec 2018 Features
Vogue’s third Fashion Festival in Paris was a showcase of how the title not only monetises from events but also boosts brand awareness.10th Dec 2018 Features
In the year since new CEO Dan Hickey helmed suburban Milwaukee-based Kalmbach Media, he has been focused on the rapid transformation of the company from a traditional print publisher into a provider of high-quality media and related services for modern enthusiast audiences.10th Dec 2018 Features
Visit our Youtube channelFIND OUT MORE
FIPP newsletters allow you to keep up with industry trends, research, training and events across the worldFIND OUT MORE
What’s happening now, what’s coming next