‘Overall conditions’ lead to ‘unsurprising’ ad spend deceleration: Group M’s updated forecast

Group M has revised its June forecast, citing “overall conditions” as the reason for predicting “unsurprising” deceleration of growth in both 2019 and 2020.

This year, despite solid growth in the US and UK, growth is set to be nearly a percentage point slower at 4.8% versus 2018’s 5.7%, while 2020 should be up 3.9% against 2019’s 4.8%.

The report was released this week

The report forecasts growth between 3 and 4% through to 2024, and notes that, while this is much worse than in recent years, it is a similar pace of growth to that experienced during 2012 to 2014.

Canada and Australia growing in different directions

Group M’s global president of business intelligence, Brian Wieser, noted that while Canada and Australia are similarly sized markets, they are growing in different directions.

Australia’s growth (click to enlarge)

Canada is expected to grow slightly faster over the next five years (5% in 2019, and 3% next year and in subsequent years), while Australia’s soft market and risk of recession means it will grow only slightly (2% in 2020).

Total marketing spend (click to enlarge)

Digital growth

Much of the sector’s growth is driven by digital brands, the report notes, such as Alibaba, Amazon, Ebay, Facebook, Netflix and Uber. Such companies account for US$36bn in ad spend, a majority of the world’s growth.

Facebook and Google are likely to generate around US$175bn net this year, while estimates for digital advertising overall sit at around US$230bn this year.

Digital advertising makes up 52% of global advertising tracked in the report, and 60% of total ad spend in markets such as China, the UK, Sweden and Denmark.

Global markets

The global average is raised thanks to the US (accounting for nearly 40% of the world’s total) and UK (which is growing quickly, up 44% since 2013).

China is double the size of Japan, the third largest international market, but growth predictions are just 3.7% this year and 1.4% next.

TV, newspaper and outdoor growth over time (click to enlarge)

Radio, magazine, and internet growth over time (click to enlarge)

Necessary context

Wieser concludes his report by noting that growth doesn’t automatically mean success, and ultimately, marketers need to look at media as a “means to an end”.

“The goal should be to optimize the mix of external and internal resources that drives business growth. Marketers can look at the data included here to gain a sense of the health of their media partners now and over the next several years,” the report states.

“However, even a media owner in decline may still be investing in new and better ways to connect with audiences. At the same time, other media owners may be healthy in terms of revenue growth but may not necessarily be investing in everything they can to make their ad inventory more effective.”


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