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China leads global ad growth in 2017

The US and China will account for half of all net growth in ad spend throughout 2017 when global ad budgets will swell to hit US$547 billon, with China taking back a narrow lead over the US, according to a new forecast by GroupM.

With late-year growth, GroupM China revised 2016 to +7.8%, up from 6.6% predicted earlier. FMCG advertising rose 4.6% in the second quarter year-on-year, much faster than the 2.0% growth forecast.

Continuing urbanisation and solid consumer confidence lend ample support for continued growth, but China no longer boasts recent double-digit rates. Coming off of peak growth, GroupM expects digital advertising in China will grow 29.5% in 2016 and slow to 21.5% next year.

China and other ‘new world’ countries continue to over-contribute to global growth, but a new normal more modest level of growth has settled in. Digital advertising continues to be the chief beneficiary of growth.

2017 global advertising is predicted at $547 billion (+ 4.4%), with digital’s share to reach 33%.

In 2016, digital captured 72 cents of every new ad dollar (USD), and TV 21 cents. In 2017, digital will capture 77 cents per new dollar, TV will get 17 cents.

“Ad growth has shadowed the global economy’s long, low and level recovery cycle since 2010. These new forecasts emphasise the ad story of our times is however structural, not cyclical. 20 years on from the internet becoming a measured ad medium, digital remains the engine of advertising growth and disruptor-in-chief of the entire marketing economy,” said GroupM’s futures director Adam Smith.

A variety of economic factors across the globe see another year of modest growth in advertising as brands continue to be pressured for performance in low-growth environments.

Despite the overhang of uncertainty tied to outcomes of the US presidential election and the UK referendum on departing the European Union, advertising budgets have not yet been impacted.

Elsewhere in the BRICS, the report states that Brazil is emerging from recession, after reaping Olympics benefits. There is increased digital adoption, particularly in mobile; since the beginning of the year mobile users grew 22% to reach 74 million. Modest ad growth of 2% in 2017 is predicted, enough to keep Brazil the world’s number-five ad economy (USA, China, Japan, UK, Brazil, Germany).

India remains, by far, the fastest growing market in the world’s ten, $10 billion plus ad markets. Growth is forecast at 13.8% in 2016 and 12.5% in 2017, with an economy fueled by low interest rates, sustained urban demand and the impact of key reforms.

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