IHS: Global Ad Market to See Double-Digit Growth in 2017

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LONDON: Global advertising revenue hit $532 billion for 2016, according to new figures from IHS Markit, which predicts that online will overtake TV as an ad medium within the next five years.

The $532 billion represents a 7.1-percent increase, helped by big brand budgets and quadrennial events such as the Olympics, European Football Championship and U.S. presidential election. Advertising revenue accounted for 0.69 percent of global GDP in 2016, up from 0.66 percent in 2015.

“The advertising industry is about to turn the corner thanks to the global economy getting back on track,” said Eleni Marouli, principal analyst at IHS Technology and report author.

TV was the number one medium globally for advertising revenue, accounting for $192 billion, or 36 percent, of global revenue. “Despite the incredible growth of online giants like Facebook, Google and Snapchat, the TV market continues to benefit from big brand budgets,” Marouli said. “Quadrennial events such as the Olympics, the European Football Championship and the U.S. elections helped keep TV on top.”

Revenue from online advertising is forecast to overtake TV by 2020. “In some countries such as the U.K., online already accounts for almost 50 percent of total advertising revenue and will only keep getting stronger,” Marouli said.

In 2016, online advertising accounted for almost $160 billion, or 30 percent of global revenue. In the U.S., TV advertising revenue made up roughly 38 percent of the country’s total; online was just behind with 36 percent. In China, online advertising revenue was 17 percent greater than TV advertising revenue, a difference of $15 billion.

“We expect global advertising revenue will grow to $590 billion in 2017,” Marouli said. “The strongest growth will come from the Middle East and Africa, followed by the Asia Pacific, where India and Indonesia will steal the show.”

The top 10 markets make up 75 percent of the global revenue figure. “The top 10 markets still account for the lion’s share of global advertising revenue,” Marouli said. “However, their collective power has dropped due [to] slowdowns in the Chinese and Brazilian economies, which were the rising stars in the top 10 in 2015.”

Four out of the five fastest growing countries in 2016 were in Africa. “Ghana and Kenya have been high on the list of many media companies’ expansion plans, and we are seeing growth above 20 percent,” Marouli said. “These markets are still growing from a low base, but the sheer size of their populations means they are becoming interesting targets for big brands.”