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Worldwide advertising revenue growth is expected to decline slightly this year, dragged down by more traditional mediums like television and print and a slowdown in the U.S. and U.K.
Excluding cyclical events like last year’s Olympics and the U.S. elections, media owners’ ad revenues are expected to increase 4.7% this year globally, compared with 4.9% growth in 2016, according to the latest forecast from Interpublic Group of Co IPG >0.50% s.’ ad buying group Magna . MGA >0.22%
Media companies knew to brace for a slowdown generally this year given the $5 billion that Magna estimates they raked in last year from ads featured around events like the Summer Games, U.S. elections and Copa America soccer tournament. Including such cyclical events in both years, Magna predicts global ad revenue will rise 3.7% to $505 billion in 2017, compared with 5.9% growth last year.
Petering growth in the ad market more broadly, while minimal, is symbolic of a broader shift in how advertisers are allocating their spending, as well as some particular trends in the U.S.
In the U.S., advertising sales are expected to grow 3.4% in 2017, compared with 5.9% in 2016, not counting the incremental revenue from politics and the Olympics. “This represents the slowest rate of advertising sales growth since 2014,” when the market grew by only 1.6%, Magna said in its report. (Including cyclical event spending, U.S. advertising sales are expected to grow 1.6%, compared with 7.7% last year)
A weak first quarter in the U.S. set the scene for a potentially tough year ahead, with all non-digital media categories either declining or remaining flat compared with a year ago.
In the U.S., national television took a “bigger-than-expected hit,” declining 4% in the first quarter. Out-of-home advertising was also unexpectedly weak. Magna also attributes the U.S. slowdown to an “abrupt slowdown in economic activity.”
There’s also a big shift this year in how advertisers are budgeting.
A record level of global ad growth in 2016 came from an influx of spending on digital media, as well as an increased amount of spending on linear traditional television, despite rising rates, said Vincent Letang, executive vice president of global market intelligence at Magna. Prior to last year, some large advertisers had been spending very little on paid social ads, so they started pumping more dollars into the medium, he explained. At the same time, a lot of those brands decided “they needed to maintain their TV exposure.”
Now, those advertisers are tightening their belts, especially on the TV front.
Globally, TV ad revenues will be down for the first time since 2009, dipping 1% this year, as ratings erode and ad pricing cools, predicts Magna. TV grew 3.3% last year. TV will likely remain flat for the next five years, said Mr. Letang. Total offline ad sales, including television, print, radio and out-of-home, will decrease 2%.
Linear TV will fare no better in the U.S., where it’s expected to decline by 3% to $42.8 billion. In addition to “a softening of scatter pricing,” there’s “weak demand” from big spenders in categories such as automotive, food and beverage and pharmaceuticals, according to Magna’s forecast. (Stripping out politics and the Olympics, national TV will be down 1.4%, compared with a 1.1% increase in 2016.)
There’s good news for digital media, which is on track to surpass linear TV spending in 2017, thanks largely to a growth in mobile ad and search spending. Digital ad revenues will grow by 14% and reach $204 billion to assume 40% of total global ad sales, compared with 36% for television.
Within digital, over 50% of ad sales are generated by impressions and clicks on mobile devices. Mobile advertising will account for over $100 billion for the first time this year, making it a larger category than print and radio combined.
Next year, media companies can look forward to the return of the Winter Olympics in South Korea, mid-term elections in the U.S. and the World Cup in Russia driving 4.5% growth.
Source : https://www.wsj.com/articles/global-advertising-growth-to-slow-slightly-this-year-1497412803Thanks for your visiting my page.