IHS Markit forecasts advertising revenue will grow 7.1% to $532bn, in 2016. Advertising markets are benefitting from a strong global economy, which increased 2.4% in real terms (the highest level since 2007 excluding 2014). Strong growth in world real private consumption at 2.6% also buoyed advertising revenue as brands tried to take advantage of heightened consumer spending. Advertising revenue accounted for 0.69% of global GDP in 2016, up from 0.66% in 2015.
The top 10 markets still account for the lion’s share of global advertising revenue. However, their collective power has dropped from accounting for 76% of global ad revenue in 2015 to 75% in 2016. This is due primarily to the slowdown in the Chinese and Brazilian economies, which were the rising stars in the top 10 in 2015.
Strongest growth is noted in Africa. The top 5 growers (excluding Venezuela, where growth is completely misrepresented by hyperinflation) were mostly in Africa and included Ghana and Kenya, which have been high on the list of many media companies’ expansion plans. These markets are still growing from a low base, but due to their population are becoming interesting targets for big brands.
TV remains the number one medium globally. Despite the incredible growth of online giants like Facebook, Google and Snapchat, the TV market continues to benefit from big brand budgets and remained the largest advertising category, lifted by quadrennial events like the Olympics, the Euro Cup and the US elections. However, in some countries including the UK, online already accounts for almost 50% of total advertising revenue and IHS Markit forecasts that in the next 5 years, we will see TV overtaken globally by online.
The most mature markets are mostly high GDP per capita markets. Israel topped the list at $719, followed by Switzerland and the US. China generated only $65 per person in advertising, despite being the second largest advertising market. Zimbabwe was the last on the list at $0.002 ad revenue per person per year.
What to expect in 2017:
As the economy accelerates to real GDP growth of 2.8% in 2017, IHS Markit expects to see a double-digit growth rate of 11.1% in advertising revenue to $590bn. The strongest growth will come from the Middle East and Africa, followed by APAC, where India and Indonesia will steal the show. Developed markets are likely to slow down in an “event-light” year, following the high spending for the Olympics and the US elections. Online will continue to be the fastest growing medium at 14%, however IHS Markit expects a deceleration in the revenue growth of Google and Facebook, which are not attracting TV budgets to their online video offerings as fast as they had hoped.