Carat Downgrades 2016 Forecast, Citing Lower Expectations For China And Brazil

Dentsu Agency Carat has downgraded its 2016 global ad-spend forecast -- now projecting growth of 4.5% to $538 billion, down from its earlier prediction (September 2015) of 4.7% growth for this year. The agency cited revisions to regional forecasts in the Asia-Pacific and Latin America regions as the primary reason for the downgrade, particularly lowered expectations for China and Brazil.

The agency also issued its first projection for 2017, which at least for now looks to be a second consecutive year of 4.5% ad spend growth to approximately $562 billion.

For the U.S. market, the agency has upgraded its projection to 4.7% growth (from 4.5%) to $204 billion in part fueled by the presidential election year campaigns, which are expected to contribute $6 billion to spending in the region, according to the agency. Olympics spending will also contribute around $1 billion to the 2016 total, although the agency noted that not all of it will be incremental.



In 2017, growth in the U.S. will taper off a bit to 4%, without momentum from the quadrennial events. 

Digital spending remains the engine of growth, Carat reported. Powered by the upsurge of mobile (+37.9%), online video (+34.7%) and social media (+29.8%) in 2016, digital is expected to continue to grow by double digits -- 15% this year, and another 13.6% in 2017. Overall, Carat predicts the upsurge of digital to account for 27% of advertising spend in 2016 and extend significantly to 29.3% in 2017, reaching US$161 billion globally.

Commenting on the revised forecast, Jerry Buhlmann, CEO of Dentsu Aegis Network, stated:

“Carat’s latest advertising forecast and its first analysis of the 2017 landscape gives us reinforced optimism for global advertising spending. Whilst economic volatility has impacted some major markets, solid growth has been maintained globally, with stability foreseen for this year and next.

The strength of Digital continues to be the dominant element in the growth of the global advertising expenditure whilst TV spend remains as the foundations of our industry.

As advertising becomes more data-driven and complex, it’s crucial to move rapidly to navigate and meet the needs of the digital economy and this is reflected in the innovative capabilities and approach we provide to our clients.”

Carat’s revised forecast comes a couple of weeks after a similar downgrade for 2016 global spending was issued by Publicis Groupe’s Zenith.

More on Carat’s revised forecast can be seen here.  

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