In 2015 global ad revenues are expected to grow 4.8% to $536 billion, according to the latest forecast from Magna Global, part of IPG Mediabrands. That’s down just a tick from the shop’s June forecast of 4.9% growth for next year. And it represents a deceleration from this year when Magna expects the final tally will be 5.5% growth to $512 billion. The release of the forecast was timed to the start of a UBS media conference in New York Monday.
The U.S. will also see less growth next year, with a 2.7% gain in ad revenue to $169 billion versus the expected 4% spurt to $165 billion this year. However, if non-recurring revenues are excluded from this year’s tally (Olympics and election spending) then growth for the two years is about equal.
Magna characterized U.S. ad growth this year as “mediocre” due to several reasons, including the underwhelming performance of the Sochi Winter Olympics, which delivered both lower ratings and lower revenue than was expected ($450 million actual versus a predicted $600 million). Midterm election spending was also tempered by the location of “battleground states” which were in disproportionately smaller markets this year.
And the first quarter of 2014 also experienced what Magna terms a “micro recession” with severe weather that curbed spending by the retail, restaurant and automotive categories.
The continuing shift of dollars to digital also contributed to lower overall ad revenue growth, per the Magna report. In the U.S. digital ad revenues will reach a 30% share in part because categories like consumer packaged goods and pharmaceuticals, which had been considered laggards in the digital spending space, have started to embrace digital on a broader scale.
U.S. digital ad revenues this year are on pace to grow nearly 16%, with video up 28%, social media up 65% and mobile up 77%.
Overall U.S. TV revenues this year are estimated at 4.8%, while broadcast network TV ad sales will show a 3.9% decrease excluding Olympics. Cable TV ad sales growth will slow to 3% from last year’s 5.8% growth rate. In 2015, TV revenues will decrease by 1.4%.
Newspaper ad sales will be down 9.2% to $16.4 billion this year and magazine ad sales will be down 10.9% to $10.7 billion. Those figures do not include digital sales for either category although Magna said the digital sales “are not growing fast enough to offset the decline of paper-based sales.”
The same is true of radio ad revenue. Traditional radio will be down 3.2% to $14.7 billion this year, excluding digital platforms which are growing, but not fast enough to off-set erosion on the traditional side.
Globally, digital will continue to be the fastest-growing ad medium for the foreseeable future and ad revenues generated in the sector will catch up to TV globally by 2019 according to the latest Magna forecast. This year, digital revenues are expected to total $142 billion, up 17.2%, driven by mobile and social. In 2015 digital will reach a 30% share globally, increasing 15.1% to $163 billion.
According to the Magna survey, digital is already the top media in 14 of the 73 countries surveyed, including the UK (highest digital share in the world at 47%), China, Canada, Germany, Sweden and the Netherlands. In September Magna reported that in the U.S. digital will surpass traditional TV spending by 2017 as well as the “all screen TV total” by 2018.
Magna has revised growth prospects in numerous markets for next year compared to its June forecast. The latest forecast upgrades growth for both North America and Western Europe, both previously seen growing by 2.5% and both now seen doing a bit better with 2.8% growth. Latin America will also grow somewhat faster the previously expected with a revised 2015 increase of 12.9% versus an earlier prediction of 11.5%.
However Magna has cut sharply its growth forecast for Central and Eastern Europe to 3% growth , less than half the earlier forecast. Geopolitical issues are cited as part of the reason for the downgrade. The forecast for growth in most of the BRIC countries has been down- graded as well per the Magna report. China and Brazil are expected to growth next year by 8.6% and 5.9% respectively, but that’s two or three points below previous expectations.
Ad revenue growth in Russia will be hit even harder, Magna reports, slowing less than 1% of an increase in 2015, which compares to an earlier forecast of 7%. India’s outlook remains vibrant however, with expected growth of 13.3% next year, essentially in line with the growth India will turn in this year.“In 2014 the long-awaited European recovery finally came in time to partly offset a weaker than expected growth in the U.S. and BRICs,” said Vincent Letang, director of global forecasting at Magna Global. “In 2015, the lack of non-recurring events, the continued slowdown of the BRICs and the deflationary effects generated by the rise of digital media will inhibit global advertising growth, in a slight disconnect with the positive acceleration in the macro-economic environment.