Ad spending downward to 3.4 percent growth says GroupM

catherine-zeta-jones_luxNew Delhi : GroupM today revised its biannual worldwide measured advertising spending forecast for 2013 downward to $507 billion reflecting a 3.4 percent growth rate compared to the 4.5 percent rate predicted in December of last year.

The revised forecast was published in “This Year, Next Year,” which also included a final tabulation for 2012 revealing advertising spending in measured media hit $490 billion, a 3.6 percent increase over spending in 2011.

Also, in its first prediction for 2014, the 75-country forecast predicted that global ad spending will increase 5.1 percent compared to 2013, representing $533 billion. It was prepared by GroupM Futures Director Adam Smith and released today.

For the U.S. market, the report said advertising investment in measured media would grow only 1.8 percent in 2013 to $156 billion, up from $153 billion in 2012.  For 2014, the forecast is a 2.9 percent hike in spending to $161 billion.

“We estimate marginal growth in advertising spending in 2014 on a comparable component basis,” said Rino Scanzoni, GroupM’s Chief Investment Officer for North America.  “However the Sochi Winter Olympic games will add an additional 50 basis points to the growth rate with funding coming primarily from existing budgets.”

Regarding worldwide spending, Smith said the downward revision to growth in 2013 ad spending could be attributed primarily to continued economic discord in the Eurozone—the same reason that led GroupM to revise its 2012 forecast downward.

“The Eurozone periphery, specifically Italy, Spain, Portugal, Greece and Ireland, is once again the main reason for the decline,” Smith said.  “Stabilization is elusive. We now expect this group to record an 11 percent fall in measured advertising in 2013.”

The revised forecast for Western Europe predicts a 2.4 percent decline in spending compared to 2012 to $97 billion. Spending in 2014 is expected to rise only 1.8 percent to $99 billion.  Smith added that the Eurozone periphery accounted for 7 percent of global advertising investment before the economic crisis and now accounts for only about 3 percent although this group’s nominal GDP changed little during the same period.

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.

Digital Spending to remain steady

The report predicted that investment in digital media would account for 19 percent of measured ad spending globally this year ($95 billion). For 2014, digital ad spend is expected to rise by 14 percent to occupy a 20 percent share of ad budgets.

Hotspots  

Within the industrializing world, China’s preeminence as an advertising rainmaker looms ever larger, this year raising 40 percent of net new global investment, according to the report.  At the same time, there is similar support for sustained advertising growth in Russia.

“Western advertisers’ share of investment in both countries remains as substantial as ever, and is even rising, according to standard industry monitoring sources,” Smith said.

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