• by Larissa Faw , Steve McClellan  @mp_mcclellan, December 3, 2018

GroupM, Magna and Zenith are out with their annual advertising forecasts for 2019, which predict low-to-mid-single-digit increases in ad growth next year.

The good news is that there is growth next year, following a strong 2018 that included a record $4 billion in midterm election spending. Here’s a rundown of the three forecasts. 

GroupM 

GroupM has downgraded its global spending forecast for next year, now projecting growth of 3.6% to $563 billion. Previously, the firm, part of WPP, had forecast 3.9% growth for 2019. 

GroupM has also downgraded its expectations for this year, now projecting worldwide spending growth of 4.3% to $543.7 billion. Earlier, it had predicted growth of 4.5% for the year. 

The group is projecting a spending gain in North America next year of 2.4% to nearly $211 billion. That growth rate will be somewhat weaker than the projected 3.4% gain for 2018  — to about $206 billion.

“GroupM's still strong, but slightly fraying 2018 view ties to macro questions: tighter money, China’s slowing growth and the potential for pricey trade wars,” said futures director Adam Smith. “Real interest rates are edging up globally, but serious potential problems remain limited to a fragile five: Argentina, South Africa, Brazil, Turkey and Venezuela.”

It’s possible, the report indicated, that one or more of those countries could fall into recession next year. 

In the U.S., the forecast notes that lower unemployment and other indicators have boosted consumer confidence but increases in energy prices, rising interest rate rises and low unemployment have many concerned about increased inflation.

“Marketers continue to study their investments in traditional media and have increased their scrutiny of all phases of digital, with a continued emphasis on verification and value,” the report concludes. “The implementation of the EU’s GDPR has caused several U.S. digital publishers to revise their data-sharing and targeting policies, which may put a slight drag on the spending increases in this area.” 

Pressure on the auto and consumer package goods sector are suppressing growth to some extent, per GroupM report. 

It predicts that 10 countries will provide 83% of all 2019 growth. China remains the largest contributor, but 2019 will be the nation’s sixth successive year, with single-digit ad growth. It will mark its lowest growth rate yet recorded. That said, its $90 billion ad market is second only to the U.S. and has doubled since 2010. 

Other big contributors to spending growth next year include the U.S., India, Japan and the UK. 

GroupM CEO, Kelly Clark said: “Worldwide advertising investment grows slowly but marketing has never moved faster. Automation proliferates, cycles accelerate, talent grows more mobile. The gap between the cost of failure and the value of success grows wider.” 

Magna

Magna forecasts that global advertising will increase 4.7% to $578 billion next year as the macro-economic environment is expected to remain sturdy in most of the top advertising markets, including the U.S. , China and India.

That’s on top of a strong 2018, which Magna reports will have growth of 7.2% to $552 billion. That’s the strongest growth rate since 2010, when the ad market recovered after two years of recession, and the second strongest since 2004, thanks to the combination of increased demand and cyclical drivers, like election and Olympic advertising.

In the U.S., Magna predicts advertising growth of 2.4% next year to $213 billion. Growth will decelerate versus this year, mostly due to the lack of cyclical events. U.S. ad revenues will climb 7.5% in 2018 to a record $208 billion, including a record $4 billion in mid-term political ads, per Magna’s forecast.

(Magna, part of Interpublic, bases its forecast on net revenues generated by media companies, versus media spending by advertisers, the format used by Zenith and GroupM.)

The major cyclical events that took place in 2018 generated approximately $6 billion in incremental ad revenue, a record, mostly due to the aforementioned political spending in the US. Those events contributed 1.2% to global ad growth in 2018.

Sixty-seven of the 70 markets analyzed by Magna showed growth in 2018, with Singapore, Peru and Bahrain the only markets to shrink. The fastest-growing markets were Argentina and the Ukraine (20% and 25% respectively).  

Many emerging markets grew by double-digits, including  India (14%), Egypt (16%), Vietnam (11%) and Brazil (12%), boosted by the political campaigns and the World Cup.

Digital media sales represent 46% of total ad sales in 2018. Maturity means growth rates will slow down in the next few years, but spending will still grow by double-digits in 2019 (13.3%), which should ensure digital ad sales represent nearly half (49%) of global ad dollars next year.

In the U.S., main drivers of 2018 growth were the strong economic environment, retail sales and business confidence that prompted most industries brands to increase their marketing and advertising spending. Finance, pharma, food and beverage and technology, were among categories that increased advertising spend 10% or more. Retail and personal care were up too, while automotive, movies, restaurants and telecoms reduced ad budgets.

Digital advertising continued to show impressive growth in 2018: paid search advertising grew by 16%, social media ad sales grew by 33% and online video ad sales by 26%. Overall digital ad sales grew by almost 17% while linear ad sales (television, radio, print, out-of-home) were down 1% including special events and down 5% excluding such events.

Digital advertising reached several milestones in 2018: revenues passed the $100 billion mark ($107 billion) and account for half of total U.S. advertising sales for the first time (51.5%).

Zenith

Publicis Groupe’s Zenith is forecasting 4% global ad growth in 2019 to $604 billion.

For the U.S., Zenith is projecting 3% growth in 2019 to reach $210 billion.  

Ecommerce advertising is poised to transform the advertising market in much the same way that paid search did in the last decade, adding about $100 billion of new money into the global advertising market over the coming years. 

This growth is fueled by China, where ecommerce advertising — defined by Zenith as advertising that sits alongside and within search results and product listings on ecommerce sites — will spike from 0.8% of all China's ad spend in 2009 to 18.2% this year.

Globally, ecommerce advertising is about as advanced as it was in China at the end of the last decade.

Online video advertising will grow at an average 18% a year over the next few years, twice as fast as other forms of internet advertising and well ahead of any other channel. Online video advertising will grow by $20 billion in the next three years, while paid search will grow by $22 billion. Between them these two channels will account for 60% of the extra ad dollars added to the market over this time. 

Online video and television, taken together, are more important to brand-building than ever. Their combined share of ad spend in "display" media — all media except paid search and classified advertising — has risen from a 46% share of the ad pie in 2012 to 48% this year.

By 2021 Zenith expects television and video will have a combined 49% share of global "display" – a higher share than television ever achieved on its own. Further, linear TV's share is projected to drop to 29.9% in 2021, the lowest point since Zenith started tracking the medium in 1980.

“Brands are transforming their businesses to take advantage of the new digital opportunities available to them,” stated Vittorio Bonori, global brand president, Zenith. “Better segmentation and targeting, personalized creative and direct transactional relationship with consumers are combining to drive brand growth.” 

Print continues to lose market share at the expense of Internet advertising, with newspapers and magazines shrinking an average rate of 4% and 6% a year respectively, to end with 7% and 3% market shares in 2021. 

"Mature" markets — North America, Western Europe and Japan — account for 62% of global ad spend this year, down from 75% 10 years ago. "Rising" markets — everything outside of those three regions — will contribute 54% of the growth in global ad spend between 2018 and 2021, increasing their share of global expenditure from 38% to 40%.

India is a standout market, growing at 13.5% a year from $9.7 billion in 2018 to $14.2 billion in 2021, when it will become the world’s eighth-largest advertising market.