Next year promises to be a stronger year for ad spending worldwide, but mainly due to big cyclical drivers like the Winter Olympics, the FIFA World Cup and the US mid-term elections, according to Magna’s latest winter update. The advertising forecast pegs global ad revenue to rise by 5.2% to US $535 billion in 2018, up from 4.1% growth last year. Stripping out those big events, however, would reveal a slower pace of growth: 4.1% in 2018, compared to 5.1% last year.
In Asia-Pacific, Magna has brightened its latest outlook for 2018 to 5.9% growth (to US$165 billion) from 5.1% in its earlier estimate, which now marks an improvement from the 5.7% growth in APAC in 2017.
That’s largely due to an upward revision in the estimate for digital-centric China. Whereas Magna previously expected only 6.7% growth in 2018, it now expects a gain of 8.5%, nearly matching this year’s pace as fears of a broader economic slowdown dissipate.
The fastest growth in the region, meanwhile, is set to come from across South Asia, with India, Pakistan and Sri Lanka all poised for 12% gains. “Growth is in line with the economic development in these markets,” Gurpreet Singh, managing director of Magna Global APAC told Campaign. “The temporary disruption caused by demonetization and GST [in India] has bottomed out and now the market is poised to realize its growth potential.”
The one blemish in Magna’s largely positive global outlook is Singapore. It is the only advertising market—of 70 analysed—that Magna predicts may shrink next year, by -3%, which would mark its third straight year of declines. Weaker export demand and consumer confidence in Singapore, Singh said, are hitting local marketing budgets.
“Advertisers are careful in deploying spend in an uncertain sales environment,” he said. “Spends are moving to other forms of marketing activities like e-commerce, activations and content, which is not part of tracking in this report.”
Digital in the driver’s seat
Digital is responsible for most of the growth in the region, with digital ad revenue rising another 15% next year to US$69 billion. That would represent 42% of total ad budgets in the region, up from 36% in 2017 when digital surpassed TV as the top ad category.
The trend here, of course, is a global one. Digital ad sales worldwide are expected to gain 13%, Magna reports, slightly slower than the 17% pace we saw last year, but still on pace to keep ahead of other categories. By 2020, Magna estimates digital ad sales will form half of all ads sold globally.
More specifically, it’s mobile that remains the cash magnet of digital advertising. While this year’s 39% growth rate is unsustainable, Magna expects mobile ad spending to jump a further 27% in 2018, in sharp contrast to the -4% drop anticipated for desktop.
“The transition to a digital-centric media world accelerates as digital ad sales continue to grow as fast—and often faster—than expected,” Vincent Letang, Magna EVP of global market intelligence, said in a release. “Meanwhile linear television struggles in most major markets (US, UK, Australia) as CPM inflation is no longer strong enough to compensate for declining ratings and lower demand from consumer goods.”
In APAC, most markets continue to be led by digital growth, noted Singh, though it varies by geography. “In Pacific, eastern and North Asia markets, digital would continue to grab high ad expenditure share—with the highest share in some markets and fast closing gap with TV in others. In South Asia and SEA markets, TV is still strong … with high ad expenditure shares, but digital is moving very fast.”
Linear TV ad revenues are set to gain 2.5% worldwide in 2018 to $183 billion. This, however, is entirely attributed to those big cyclical sports and political events, without which there would be no growth.
Out-of-home is the other offline channel poised to grow. Magna predicts a 3% gain next year to $33 billion.
Print and radio ad sales, however, can expect to slip further. The report expects an 11% drop in print ad revenue to $54 billion while radio will lose 2% to settle at $28 billion.