IPG Mediabrands has downgraded its global spending growth forecast for 2014, now estimating that worldwide ad revenues will be up 6.4% this year to $516 billion, down from its previous estimate of 6.5% growth.
The IPG unit said the slight downgrade was largely due to significant revisions in its country-by-country forecasts. “Just focusing on the 10 biggest markets, we are increasing the forecast for four markets but decreasing it for the other six,” the forecasting unit reported. “On the up side: the US, Canada, UK and Brazil will all grow slightly faster than previously expected. China, Russia, Germany, France, Australia and Japan will grow as well, but at a lower rate than previously expected.”
Of the $31 billion of additional advertising spend expected in 2014, almost 60% ($10 billion) will come from North America and Emerging Asia ($8.5 billion). In terms of individual markets, the U.S. and China will provide nearly 50% of the world market's growth -- $9.5 billion and $5.5 billion, respectively. They will be followed by Brazil and Indonesia with combined growth of $4.5 billion.
Vincent Letang, EVP, director of global forecasting at Magna Global, said: “The global advertising economy returns to robust growth as digital media spend is growing by double-digits and television is benefitting from the various non-recurring events of 2014. The only losers in that picture are other traditional media categories, that are losing market share at an accelerated rate.”
As it previously forecast Magna said that the U.S. would grow at a significant clip versus last year. Media owner ad revenues will grow 6% (versus last year’s 2.4%) to $168 billion. The sharp gain is due to several factors including “an economic environment that is gradually improving,” as well as to a roster of special events including several global sports events, the 2014 mid-term election cycle and the implementation of the Affordable Care Act.”
Western Europe will finally return to growth -- with a gain of 2.2% after years of stagnation, Magna said. Eastern Europe and Asia-Pacific will grow 6.3% and 7.6% respectively. Latin American advertising spend will grow by 15.4% as high inflation (especially in Argentina) and soccer madness should offset a weak economic environment. Brazil, host to the ongoing World Cup will grow by 16%, largely as a result of that quadrennial contest.
While China’s growth will be less than previously anticipated, spending in the market will reach $45 billion, making it the second largest ad market behind the U.S. China overtook Japan for the number two spot in 2013.
The non-recurring sports events of 2014 will contribute to the global growth of television -- 7.2% -- compared to 2.7% growth in 2013. Digital media continues to grow by double digits, although the growth rate will slow slightly due to the maturity of many markets. Still, digital spend will increase by nearly 16% to approach $140 billion and a 27% market share globally, adding $20 billion and two market share points compared to 2013.
Of that $20 billion in additional spending, the bulk will come from social media ($4.5 billion), search ($10 billion) and video ($2 billion), while non-social, non-video display formats (e.g. banners) are stagnant globally and declining in many mature markets.
Mobile media (ad campaigns reaching users on smartphones and tablets) is now capturing the bulk of digital media growth. In 2014 it will grow by $10.3 billion to $27.1 billion, a growth rate of 61% compared to 9% for non-mobile. Mobile already represents 19% of digital media advertising; it will grow to 24% in 2014 and to 38% by 2019.