Carat predicts bright 2014 & 5% ad spend growth in 2015

Some of the ad spend forecasters, including the likes of Magna Global, have been clearing away the grey skies hovering around industry spends. Most are predicting a bright 2014. Dentsu Aegis’ media agency, Carat, brings similar news. In its forecast for worldwide advertising expenditure not only has Carat highlighted a good 2014 but has also shed light on 2015 expectations.

Based on data received from 59 markets across Americas, Asia Pacific and EMEA, Carat’s global advertising expenditure forecast shows global advertising revenues accelerating by 4.8 per cent in 2014 to USD 551 billion. This is an upward revision on the 4.5 per cent forecast in the previous Carat Advertising Spend report issued in September 2013 and a notable increase in pace on the actual 3.3 per cent growth in 2013.

Carat predicts that global advertising expenditure in 2015 will continue on an upward trend, with 5 per cent year-on-year growth.

The Asia Pacific Scenario
Asia Pacific now commands 35 per cent of global media spend which is largely down to significant growth in digital, strength in China and Japan, and rapid growth in Southeast Asian markets.

“Southeast Asia continues to grow at a significant rate with the Philippines and Vietnam leading the way. This provides a great opportunity for agencies to grow as the market strengthens. China remains a major player in driving growth for Asia Pacific, albeit more moderately versus previous years. Japan’s Digital spend will rise significantly, with growth in new media in all other markets across the region. Companies who are agile and provide innovative and integrated solutions will be able to unlock those budgets and work with clients to grow their businesses with their own,” observed Nick Waters, CEO Dentsu Aegis Network Asia Pacific.

Y-O-Y% growth at current prices
2013 2014 2015
ASIA PACIFIC 5.0 (4.7) 5.6 (5.2) 5.9
AUSTRALIA 0.8 (0.0) 2.1 (1.0) 1.9
CHINA 7.4 (6.9)  8.0 (7.9) 8.3
INDIA 8.1 (7.0) 8.7 (7.6) 9.8
JAPAN 1.4 (1.3) 1.7 (1.0) 1.7
Figures in brackets show Carat’s previous forecasts from Sep 2013

Growth in the Asia Pacific region is forecast to increase by 5.6 per cent in 2014, an upward revision on the 5.2 per cent forecast previously reported in September 2013 and an increase in pace on the actual 5 per cent growth in 2013.  Advertising spend in the Asia Pacific region is predicted to continuously increase in 2015 by a further 5.9 per cent.

Australia, the third largest advertising market in the region, returned to positive growth in 2013 with an increase of 0.8 per cent growth after two consecutive years of decline.  There was a significant increase in advertising spend in the second half of 2013, up 5.2 per cent, largely due to the Federal elections held in September 2013.  Excluding Federal elections-related spending, growth was approximately 2.6 per cent providing significant momentum for growth in 2014.  Expectations are for the local advertising market in 2014 to benefit from the current uplift in business confidence with growth of 2.1 per cent for 2014 and 1.9 per cent in 2015.

With the economy in China experiencing a moderation in GDP growth rates, the advertising market has followed suit moving from double digit growth throughout the first decade of the new century to strong single digit figures in recent years.  In 2014 total advertising spend growth is forecast to be up 8 per cent year-on-year, with a 5.5 per cent growth in TV advertising spend.  Outdoor media, which accounts for approximately 13 per cent of total media spend in China, is forecast to slow down its projected growth in 2014 whilst still achieving a positive growth of 4.6 per cent. Print spend is also challenged with Newspapers advertising spend forecasted to be down in 2014 by 6 per cent and Magazines by 8.7 per cent compared to 2013.  Digital media spend however continues to increase at a rapid growth rate, forecasted at 34.8 per cent in 2014 to become the second most popular medium behind TV in China.

The majority of Digital spend is in Paid Search (37 per cent), followed by Display (22%), with Mobile spend catching up fast and experiencing an expected 67.7 per cent year-on-year growth rate this year.  With Smartphone penetration continuing to increase and 4G services in place, this trend for increased mobile spend is set to continue.  The total market is forecast to increase by 8.3 per cent in 2015.

In Japan, advertising expenditures in 2014 are forecast to increase by 1.7 per cent compared to 2013 figures, to reach a total of USD 59 billion.  Overall spending on advertising is forecast to post year-on-year gains in 2014 for a third consecutive year due to economic recovery.  By medium, TV expenditure is forecast to increase by 2.1 per cent, Newspapers and Magazines marginally by 0.1 per cent and 0.4 per cent respectively, Radio spend held steady and Out-of-Home media spend up 1.8 per cent.

Digital media expenditures will increase at the highest rate of 6.7 per cent.  By category, Finance and Real Estate will grow by more than 6 per cent due to Abenomics (new economic policies introduced by the Japanese premier) and the construction boom surrounding the 2020 Olympics in Tokyo.  Advertising expenditures are forecast to post another year-on-year gain in 2015 of 1.7 per cent.

Asia Pacific region’s 35 per cent of the total global media spend (approximately USD 194 billion) may see major players such as China and Japan dominate advertising spend but it is markets such as Philippines and Vietnam, with predicted year-on-year growth rates of 10.9 per cent and 20.3 per cent respectively, who are experiencing the stellar growth rates.  India, with predicted growth of 8.7 per cent this year and 9.8 per cent in 2015, is also performing well.  The General Elections this year in India will drive buoyancy in the market, particularly in the first half of 2014.

The global markets
From a regional perspective, an increase in advertising expenditure is forecast across all regions, including Western Europe which has suffered two years of negative decline. Carat’s data highlights that the era of double digit decline in some parts of Western Europe may now be over, with markets including Italy, declining by 10.3 per cent in 2013, transforming into a positive growth market by 2015.

Commenting on the Carat Advertising Expenditure forecasts, Jerry Buhlmann, CEO of Dentsu Aegis Network said, “Carat’s predictions echo the increasingly positive economic sentiment we are hearing from our industry-leading clients and partners. We are seeing overall economic growth but with significant regional and local variations. With 2014 looking brighter than we previously anticipated, and further momentum gathering in 2015, the outlook for advertising expenditure is healthy for most.”

Year on year % growth at current prices
2013 2014 2015
GLOBAL 3.3 (3.0) 4.8 (4.5) 5
NORTH AMERICA 3.5 (3.1) 4.3 (3.0) 4.5
USA 3.5 (3.1) 4.3 (3.0) 4.6
CANADA 3.5 (3.4) 3.8 (3.3) 4.1
WESTERN EUROPE -1.7 (-2.3) 1.8 (1.4) 2.1
UK 3.8 (3.6) 5.0 (5.0) 4.5
GERMANY -1.3 (-1.0) 1.0 (0.0) 1.5
FRANCE -3.0 (-3.3) 0.8 (0.8) 1
ITALY -10.3 (-11.7) -1.3 (-1.3) 1.4
SPAIN -8.5 (-9.7) 2.3 (1.1) 3.4
C&EE 4.8 (5.9) 5.0 (7.4) 5.2
RUSSIA 9.9 (11.2) 8.0 (11.0) 7
ASIA PACIFIC 5.0 (4.7) 5.6 (5.2) 5.9
AUSTRALIA 0.8 (0.0) 2.1 (1.0) 1.9
CHINA 7.4 (6.9)  8.0 (7.9) 8.3
INDIA 8.1 (7.0) 8.7 (7.6) 9.8
JAPAN 1.4 (1.3) 1.7 (1.0) 1.7
LATIN AMERICA 9.9 (9.0) 12.8 (14.5) 12.9
BRAZIL 7.1 (4.6) 10.0 (12.3) 8.1
Figures in brackets show Carat’s previous forecasts from Sep 2013

Digital media’s increasing market share
By media, Digital spend continues to increase at a rapid global growth rate of 15.5 per cent in 2014, outperforming all other media and the only media to extend its market share based on 2014 and 2015 predictions. In the UK, Denmark, Netherlands, Norway and Sweden, digital media is already the number one media type.

“The real story of the advertising market is the dynamics in digital media. Digital growth accounts for three times total growth and the seismic trends within digital are causing a convergent media revolution. Social, mobile and video will all grow by at least 50 per cent in 2014 through developments in powerful technology, access to information and increasing consumer trust. Whilst the prolific sporting events including the Winter Olympics in Sochi and the World Cup in Brazil will continue to drive TV advertising spend in 2014, the gold medal winners will ultimately be the digital world,” added Mr Buhlmann.

Via Digital Market Asia Mobile

Copenhagen INK

Lars M. B. Anthonisen is Global Account Lead @ Google. Previously, he held various digital marketing positions at media companies across Europe and Asia including Regional Digital Director at MediaCom APAC, CMO at Adform and Digital Manager at Universal McCann Worldwide.

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