This marked a significant re-evaluation of the state of the industry: six months ago, the IPG Mediabrands-owned agency was predicting 2018 growth of +5.2%, based on the impact of cyclical drivers, including the Winter Olympics, the FIFA World Cup and the US mid-term elections.
But there has been stronger-than-expected growth in the market during the year so far, and for digital media sales in particular, MAGNA reported. The controversies around political targeting and data privacy that have affected some platforms have not slowed spending.
The combined advertising revenues of Facebook and Google grew by +31% year-over-year in the first quarter of 2018, even faster than in 2017 (+27%), said MAGNA – although it did anticipate a slow-down in the second half of the year as some big consumer brands pause a long-term shift of budget from television into digital media.
So far, however, MAGNA has found that spending from small, local, direct advertisers – sometimes re-allocated from below-the-line marketing channels – continues to grow quickly, offsetting any slow-down from big brand advertisers.
Overall, digital media sales will represent 46% of total global ad sales by the end of 2018 and MAGNA anticipates that it will reach 50% by 2020.
Around the world, 69 of the 70 ad markets analysed by MAGNA were expected to show some level of growth this year, with Singapore the only one forecast to shrink. Among the top 20 markets, the highest growth rates will come from India (+12.5%), Russia (+12%) and China (+10%); Latin America (+9.6%) is also growing fast.
The Asia-Pacific region is anticipated to grow at +6.9%, slightly ahead of the US on +6.4%. Western Europe, meanwhile, is struggling with low economic growth and political uncertainty, but digital advertising growth is offsetting traditional media decline, generating moderate growth overall (+4.1%).
“Global advertising spending is going to expand by the strongest growth rate since 2010 this year, as several of the largest markets experience robust economic growth,” said Vincent Létang, EVP, Global Market Intelligence at MAGNA and author of the report.
“Many brands in consumer packaged goods and automotive are freezing or cutting ad expenditure, which hurts the revenues of traditional media types while digital media, used by millions of small and local advertisers, seems to be immune from slow-down so far,” he added.
“Linear television will enjoy modest growth in most markets however, as cyclical events bring incremental budgets and strong pricing (CPM inflation) offsets shrinking volume (ratings decline).”
WARC's own International Ad Forecast, which is based on detail analysis of spending patterns in 12 key markets, also projects growth of 6.4% in the global ad market this year.
Sourced from MAGNA Global; additional content by WARC staff