Characterizing the world’s economy as “fragile” and showing “mild fractures,” WPP’s GroupM
Business Intelligence unit issued an update to its periodic tracking of economic indicators warning advertisers to be prepared for a “downturn.”
“Concerns have risen
around the health of the global economy since we published the mid-year update to our global advertising forecasts at the beginning of June,” Global President-Business Intelligence Brian Wieser
writes in the warning, noting that most of the world’s major economies have since published economic growth estimates for the second quarter suggesting they are either flat or declining.
Wieser’s analysis includes macro data such as GDP (gross domestic product), as well as PCE (personal consumption expenditures), retail sales and industrial production, the latter two which he
says “correlate more hihgly with advertising” growth.
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“Key economic variables so far in 2019 are generally negative,” Wieser concludes, emphasizing,
“retail sales and industrial production appear more unambiguously negative versus last year’s levels. Again, these variables tend to be more tightly correlated with advertising because
marketers spend on advertising in alignment with the pace at which they make things or sell things.”
The effect likely signals that ad spending will be “neutral to
negative versus last year,” but he also offered a potential silver lining, noting that “marketers can still look for opportunities in a downturn.
“In a full
economic downturn, advertising growth will generally decline, but not necessarily in every country nor in every medium. This can present opportunities. As we have written previously, global markers
with flexibility to shift marketing budgets across countries may find opportunities to redeploy resources from countries with weak economies and strong media markets to those with relatively stronger
economies and weaker media markets, as marketing dollars may go further in those instances. More generally, as we can anticipate that most marketers will cut their spending, marketers with the
flexibility to do so could benefit from maintaining or increasing spending given the relatively inexpensive opportunities to raise ‘share-of-voice’ that would exist under these
circumstances. An economic downturn environment may, in fact, provide marketers and opportunity to grab greater share.”
