Latest GroupM report confirms digital is no longer a separate channel
In response, advertisers and agencies are being
challenged to think increasingly holistically about their brand, their
consumers and their media choices, developing plans which place the consumer at
The world is increasingly becoming more connected. Not only are our phones connected online 24/7, more and more so are our watches, cars, televisions and household appliances, with forecasts that 4.9 billion connected objects will be in use in 2015. In France, our TGI survey data shows consumers have a strong desire to have their household equipped with the latest technology, while consumers in Spain and Great Britain tend to indicate that they couldn’t live without the internet on their mobile phone.
Mobile is out performing all other media on every metric – in the US, searches on mobile will surpass searches on desktop in 2015, while globally more than one billion people will use mobile as their only form of internet access. Worldwide consumers, on average, are spending almost 3 hours a day accessing the internet via their mobiles.
Advertising spend is following these shifts, with mobile and social advertising spends growing in double digit percentage points year over year. It’s estimated that 50 per cent of ad spend via Facebook and 45 per cent of digital display is mobile.
In the US, Kantar Media Advertising Intelligence reported an overall increase in total advertising expenditure in 2014 to US$141.2 billion, with both cable TV and internet display advertising standing out. This growth in internet display advertising came from increased investment from local services, media and retail categories.
The global recovery is becoming more sluggish, with 2015’s nominal aggregate GDP growth forecast reduced from 5.2 per cent at the time of our December edition to 4.5 per cent now. Measured global advertising growth has lagged GDP every year so far in the present cycle, and looks like it will do the same in 2015. The is the ‘new normal’ in a world less highly geared to faster-growth countries and in which investors reward cost control and profit distribution.
In December GroupM predicted 4.9 per cent growth in 2015, which it has now reduced to 4.0 per cent. Instead of an additional $25 billion new ad dollars, it now expects $20 billion. Why and where did the $5 go missing? The USA represents a third of global ad investment, and here GroupM reduces forecast 2015 growth from 3.9 per cent to 3.2 per cent. This erases $1.3 billion. The next biggest like-for-like revision is a further $663 million exiting Russia this year, where our preceding and highly provisional forecast of 3 per cent recession widens to -15 per cent as advertisers react to falls in consumer spending power. A small downgrade from 9.4 per cent to 8.7 per cent in China, a much bigger market than Russia, reduces growth by a similar $632million.
Next is Greece, where the latest round of austerity prompted GroupM to replace hopes of tentative recovery with a 25 per cent slump in advertising, worth $365 million. These four countries account together for $3 billion of the missing $5 billion, with much of the remainder exiting Nigeria, Hong Kong, South Africa, Japan and Brazil.
This sluggishness is therefore common to the new and old worlds. Cheaper oil moved spending power to the consuming countries, but has not yet catalysed demand, and has only until around the end of 2015 before the effect washes through.
The continuing generalised shortage of demand manifests itself in lower commodity prices, reduced business investment, low inflation and a lack of pricing power for suppliers of goods, services and labour. The aging population produces excess savings. We are several years into recovery, yet central banks everywhere are still in easing mode. As The Economist put it in June 2015, ‘interest rates can at the same time be extremely low and too high’. HSBC observes that the Fed has responded to past recessions by easing by five-points-plus. Creating that sort of headroom in present conditions seems like a cure being worse than the disease. But lacking such headroom is to ‘sail without lifeboats’, as HSBC also said.
GroupM pegs print’s share (newspapers plus magazines) at 19 per cent in 2015 and 18 per cent in 2016. Global print investment has fallen 5 per cent on average every year since 2008. It is not much consolation, but the ‘law of small numbers’ means this trajectory translates into progressively milder loss of share, as we now appear to be witnessing. As with TV/video, cross-device audience measurement and de-duplication holds the promise of publisher brands offering advertisers what UK publishers call ‘net breadth’ to correct perceptions unduly influenced by falling print circulation.
Digital media including paid search are set for 19 per cent growth in 2015, the fastest rate since 2008. Digital added 2.6 share points in 2014 to bring it to almost a quarter of measured global ad investment. In 2015 GroupM thinks it will add 3.6 share points to reach 28.3 per cent, rising to 31 per cent in 2016.
Continuous improvement and innovation in formats, attribution and automation should support double-digit annual growth beyond these forecasts. Rising demand for brand display will offset moderating though still vigorous paid search growth in developed markets.
Here are some highlights from these new forecasts. ‘New world’ comprises Latin America, central & eastern Europe, and southeast Asia, and the reference year is 2015 unless stated:
● The ‘old world’ comprises 64 per cent of measured ad investment and will provide 45 per cent of predicted ad growth. The ‘new world’ naturally complements these with 36 per cent and 55 per cent respectively.
● Digital comprises 30 per cent of old world media investment and 25 per cent of new world. On current trends the worlds will converge as early as 2018.
● Despite recession in Russia and slowdown in Brazil, the BRICs quartet will provide 40 per cent of all ad investment growth (from a recent peak of 66 per cent in 2013). The BRICs account for 22 per cent of global advertising investment.
● ‘Chindia’ comprises 17 per cent of global ad investment, and in 2016 should reach 18 per cent, surpassing Western Europe.
● GroupM calculates that from 2008-2015 for every new ad dollar traditional TV has attracted worldwide, digital has added two.
● GroupM expects Eurozone advertising to grow 1.0 per cent in 2015, slower than the 1.2 per cent recorded in 2014.
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