Global ad market forecast downgraded

WPP's media investment arm GroupM has slightly downgraded its growth forecast for the global advertising market to 3.6 percent in 2019, from the previous 3.9 percent, citing an overall sluggish macroeconomic situation and potential repercussions brought by the global trade tensions.

It also lowered its estimate for China's advertising spending growth in 2019 from 6.6 percent to 5.5 percent, citing the outlook of China’s macro economy and the overall media market, according to GroupM's "This Year, Next Year" media forecast which is released twice a year.

China remains the largest contributor in terms of advertising expenditure growth, but 2019 will be its sixth successive year with single-digit ad growth and will mark its lowest growth rate yet recorded, according to GroupM Futures Director Adam Smith. 

Globally, it estimates 4.3 percent annual growth this year with total ad spending seen at US$543.7 billion, down from its midyear prediction of 4.5 percent which it claims to be consistent with a macro outlook that remains firm, but fraying into 2019. It also cited other major macroeconomic concerns such as tighter budgets, pricey oil and trade wars. 

Digital media investment will rise 12.6 percent in 2018 and 9.7 percent in 2019, with the digital ad share of advertising investment rising from 39 percent this year to 42 percent in 2019. 

The total amount of new investment is anticipated to reach US$19 billion instead of the US$23 billion earlier predicted, with the US dollar's appreciation also suppressing growth. 

China's total media spending would reach 641.7 billion yuan (US$92.7 billion) next year, which is second only to the USA, and has doubled since 2010. 

China’s advertising intensity peaked at 0.78 percent of GDP in 2006 and has trended, sometimes fitfully, down to a prospective 0.67 percent in 2019.

China's Internet ad expenditure would remain the biggest contributor of all media types and is set to make up two thirds of the total market, more than doubling TV's share. 

Internet and out-of-home would be the only two sectors to see annual growth as more advertisers appreciate the increasing importance of out-of-home advertising formats in integrated marketing, and pushing up price levels due to limited inventory. 

But their growth pace overall also dwindled from earlier years, with the annual increase of Internet spending expected to sit at 11.5 percent in 2019 compared to 15.1 percent a year ago. 

WPP's data consultancy Kantar’s joint venture in China is also observing a more conservative stance among international clients due to the trade tensions. 

"Worldwide advertising investment grows slowly but marketing has never moved faster, with the proliferation of the automation process and a more mobile tendency for talent, and the gap between the cost of failure and the value of success grows wider," commented GroupM CEO Kelly Clark.