Global Advertising Growth to Accelerate in 2017, Forecaster Says
After a 7.1 percent gain in 2016, next year will post a double-digit percentage increase, predicts IHS Markit, which also highlights that four of the five fastest growing countries of the past year are in Africa.
Big brand budgets and quadrennial events, such as the Rio Summer Olympics, the summer's European soccer championship and the U.S. presidential election, will drive global advertising revenue to $532 billion in 2016, up 7.1 percent, according to estimates released Thursday by research firm IHS Markit.
"The advertising industry is about to turn the corner thanks to the global economy getting back on track," said Eleni Marouli, principal analyst at IHS Technology and author of the report. "Strong growth in global real private consumption also buoyed advertising revenue as brands tried to take advantage of heightened consumer spending."
The company forecasts stronger growth, in the double-digit percentages, in 2017. Marouli specifically predicted 10.9 percent growth to $590 billion next year, saying: "The strongest growth will come from the Middle East and Africa, followed by Asia Pacific, where India and Indonesia will steal the show." Developed markets are likely to slow down in an event-light year following the high spending for the Olympics and the U.S. elections.
Online will continue to be the fastest growing medium at 14 percent in 2017, but it says that "a slowdown in the revenue growth of Google and Facebook is likely as the two are not attracting TV budgets to their online video offerings as fast as they had hoped."
TV remained the No. 1 medium globally in advertising revenue in 2016, accounting for $192 billion, or 36 percent, of global revenue, according to IHS Markit. Online advertising for the year will account for almost $160 billion, or 30 percent on a global basis, compared with print advertising's $101 billion, which put it in third place.
"Despite the incredible growth of online giants like Facebook, Google and Snapchat, the TV market continues to benefit from big brand budgets," Marouli said. "Quadrennial events, such as the Olympics, the European [soccer] championship and the U.S. elections helped keep TV on top."
However, IHS Markit forecasts that revenue from online advertising will overtake TV on a global basis by 2020. "In some countries, such as the U.K., online already accounts for almost 50 percent of total advertising revenue and will only keep getting stronger," explained Marouli.
The top 10 ad markets around the world account for 75 percent of the global revenue, but they saw some weakening in 2016. "The top 10 markets still account for the lion's share of global advertising revenue," Marouli said. "However, their collective power has dropped due to slowdowns in the Chinese and Brazilian economies, which were the rising stars in the top 10 in 2015."
Four of the five fastest growing countries in 2016 were in Africa. "Ghana and Kenya have been high on the list of many media companies' expansion plans, and we are seeing growth above 20 percent," Marouli said. "These markets are still growing from a low base, but the sheer size of their populations means they are becoming interesting targets for big brands."