Carat, part of the Dentsu Aegis Network, recently released its Ad Spend Report with its predictions for ad buying in 2016. Based on 59 markets across the globe, Carat has revised its predictions for 2016 upwards, indicating an uptick in ad spend following a slower than expected 2015.
Below are some of the key takeaways to come out of the report:
Global ad spend in 2015 was not as buoyant as predicted
Although the global ad market remained robust in 2015, with growth of 4.0% to $529 billion, this was down on the predicted growth rate of 4.6%. However, Carat notes that 2014 was a particularly bumper year for advertising, with the Sochi Winter Olympics, the World Cup in Brazil and US mid-terms all generating significant advertising spend, making it a tough act to follow in 2015. In addition, challenging economic and political conditions in Russia and China have significantly reduced advertising spend in these key markets, impacting global spend as a whole.
“The media landscape is more complex and multifaceted than ever before. The diversity of media, market volatility and the rising impact of geographical events are all influencing advertising spend. For global clients, this means a greater need to be aware of such evolving scenarios, to be agile and able to move spend where it can deliver the greatest return.”
Sanjay Nazerali, Chief Strategy Officer, Carat Global
However, the outlook for 2016 is generally positive
Despite the slightly lower than expected growth in 2015, Carat does expect global markets to pick up in 2016 and expand by 4.7% to $554 billion. This figure comes from both a strengthening global economy and also several high profile events during the year – notably the US presidential elections, Rio 2016 Olympic Game and Euro 2016 football championships.
Western Europe remains stable, with year-on-year growth of 2.9% predicted in 2016; driven in particular by the UK (+5.5%) and Spain (+6.9%), despite challenging conditions in Greece resulting in a considerable swing from a predicted +8.0% growth during 2015 to -12.0%.
North America is predicted to grow by 4.5% in 2016, slightly ahead of the global average. This is mostly fueled by the US elections together with the continued success of US-based digital marketing offerings, particularly in mobile.
India remains a key emerging market for advertising
In Asia-Pacific, growth for 2016 has been revised downwards to 4.7% from 5.8%; responsibility for such reduction lies with decelerating economic growth in China causing a slowdown in advertising spend.
However, despite the drag placed on advertising markets in the region by China, India remains a stellar performer, expecting to grow by 12% in 2016. With other APAC markets likely to continue to be impacted by China’s slowdown, India looks to be the key market in APAC for advertising growth potential.
TV remains dominant globally
TV still remains the dominant advertising medium across the globe, taking 42% of global advertising spend in 2015, with 38 out of the 59 markets still reporting TV as their dominant advertising platform.
Despite advertisers continuing to diversify TV spend away into alternate digital platforms (such as video-on-demand), TV’s share of global advertising spend is only predicted to reduce by a very small percentage in 2016.
Digital continues its meteoric growth, fueled by online video, programmatic and mobile
Digital advertising now equates for 25% of global advertising spend and continues its double-digit growth, albeit with growth rates slowing as the market matures (15.7% growth in 2015 to 14.3% in 2016).
Online video is predicted to grow at 22% in 2015 and 19% in 2016 as measurement tools and platforms (including cross-device) mature and premium content becomes more accessible.
As discussed on ADTEKR previously, programmatic continues to dominate the digital market, with Carat predicting it will account for 52% of non-search digital advertising spend by the end of 2015 and enjoy 20% year-on-year growth for the next few years.
As digital becomes more established, it also becomes commoditised. However, the evolution of programmatic and search is introducing innovative private market places and stronger performance which drives digital into the premium arena.
Ashwini Karandikar, President, AMNET Global
However, concerns from advertisers remain and concerns around brand safety, viewability and ad fraud will need to be addressed by the industry to ensure this rate of growth continues.
Last, and by no means least, mobile continues to account for the greatest advertising spend growth across all media. Carat predicts spend in mobile will grow by 51.2% in 2015 and 44.5% in 2016. Key drivers for this growth remain the retargeting opportunities available on a mobile platform together with social media spend, with 70% of advertising income for both Facebook and Twitter now coming from mobile.
See the full report here.