GroupM Revises Global 2014 Ad Spending Forecast Downward

NEW YORK: Due to economic gridlock in the U.S. and the continued financial crisis in the Eurozone, GroupM has revised its worldwide advertising spending forecast for 2014 downward, from 5.1-percent growth to now 4.6-percent.

The This Year, Next Year report predicted that worldwide ad spending in measured media would hit $508 billion for 2013, a 3.3-percent increase over 2012 spending of $492 billion. For 2014, GroupM expects ad spending to increase 4.6 percent, representing $531 billion.

In the U.S., the report said advertising investment in measured media grew 1.8 percent in 2013 to $156.3 billion, which is a slight gain on the $153.5 billion from the previous year. For 2014, GroupM predicts a 2.9-percent increase to $161 billion.

“Ad spending in 2014 will enjoy a slight bump thanks to the Winter Olympics in Sochi, with spending coming mostly from existing budgets,” said Rino Scanzoni, GroupM's chief investment officer. “But overall we estimate only marginal U.S. growth on a comparable component basis.”

Adam Smith, GroupM's futures director, said that worldwide there is local, specific support for ad spending growth but he added that total global spending remains vulnerable to a wider economic downside. As for bright spots in his forecast, he said China remains the largest single source of ad spending growth, accounting for 37 percent of new dollars in 2013 and a projected 31 percent in 2014.
 
“This is a high share of contribution compared to past results,” Smith said. “A sign of the Chinese market’s maturity is that advertising's share of the country’s GDP is already on the global average and has barely changed since 2008. We might therefore expect the pace of future advertising investment growth to match GDP growth, which remains around 10 percent annually in cash terms.”
 
Smith said that digital ad spending represented 24 percent of China’s measured media investment this year, which, he noted, was comparable to the Western European average and another sign of China's ad maturity.
 
The report also mentioned that ad spending in the U.K. is strong and is predicted to rise by 7 percent in 2013 and 6 percent in 2014. The U.K. is the world's fourth-largest ad market (following the U.S., China and Japan) and the third-largest contributor to ad growth in 2013 and 2014.

Even with the strength of the U.K.'s ad market, Western Europe remains in ad recession, with a projected 1-percent decrease in spending expected in 2013. “Central and Eastern Europe ad spending growth remains in high single digits, thanks mainly to Russia and Turkey, bringing the whole continent of Europe to net zero ad growth for the year,” Smith said. “We predict Western Europe advertising will return to modest 2-percent growth in 2014, but this depends on stability being restored to the troubled Eurozone periphery.” Smith said the countries in that area (specifically Italy, Spain, Greece, Ireland and Portugal) have seen ad spending decrease by 40 percent from its 2007 high, including a predicted 10-percent drop this year.