OOH the only traditional medium to grow in 2018, says MAGNA report
By M4G Bureau - December 07, 2018
The MAGNA report on global advertising market trends says that DOOH NAR grew by +16% this year to reach $5.7 billion
In its latest report on global advertising market trends, MAGNA has revealed that global advertising revenues grew by a record +7.2% in 2018 to reach a total of $552 billion in the 70 countries analyzed by MAGNA. That’s the strongest growth rate since 2010, when the ad market recovered after two years of recession, and the second strongest since 2004, thanks to the combination of strong demand and cyclical drivers.
Global ad spend reportedly remains strong (US +7.5%, China +12%, Russia +14%, India +14%) thanks to robust economies, while Western Europe lagged behind due to economic slowdown and political uncertainty.
It says that digital advertising sales grew by +17% in 2018 – 1.5% above previous forecast, to reach $251 billion or 45% of global advertising revenues, driven by search (+16%), video (+29%), and social media (+33%). Further, non-digital ad sales (linear TV, linear radio, print, and out-of-home) were flat (+0.2%) at $301 billion.
MAGNA has also increased its forecast for 2019 advertising growth to +4.7%, as the macro-economic environment is expected to remain strong in most of the top advertising markets (e.g. US, China, India).
In other markets, the US, advertising sales grew by +7.5% in 2018 to reach an all-time high of $208 billion, including a record four billion dollars from midterm elections. Digital ad sales grew by +16.6% this year to pass the $100 billion milestone (52% of total ad sales) while non-digital ad sales stabilized thanks to cyclical drivers (-0.7%).
For 2019 MAGNA predicts US advertising growth to slow down to +2.4%, mostly due to the lack of cyclical events. Excluding the impact of cyclical events in 2018 and 2019, underlying ad spend will grow by +4.5% in 2019, compared to +5.3% in 2018, it says.
According to Vincent Létang, EVP, Global Market Intelligence at MAGNA, and author of the report, “Global advertising spending expanded by the strongest growth rate since 2010 this year. This record growth was fueled by the combination of a robust economic environment prompting most verticals to increase ad spend, as well as stronger-than-expected cyclical spend. Digital media was again the main winner but television proved resilient, thanks to the loyalty of consumer brands, strong pricing and incremental cyclical spend.”
Other key global findings include:
-Globally, net media owners advertising revenues (NAR) grew by +7.2% in 2018, to $552 billion. This is above MAGNA’s previous forecast (+6.4% published June 2018) due to stronger-than-expected market performance in the second half and stronger than expected cyclical events.
- 2018 was the ninth consecutive year of growth for global advertising revenues. Following the recession of 2008-2009 (-12%), the market grew by an average +5.5% per year over 2010-2018, growing by 60% overall through that period.
-The major cyclical events that took place in 2018 (The FIFA World Cup in Russia, Mid-Term elections in the US, Winter Olympics in South Korea) generated approximately six billion dollars of incremental ad spend, the highest volume ever, mostly due to record political spending in the US.
-Cyclical events contributed more than one percentage point (+1.2%) to global ad growth in 2018. Excluding the cyclical effect, global advertising spending growth would have been +6.1%, still higher than the normalized growth rate for 2017 (+5.3%). It is therefore continued strong underlying demand from advertisers that proved the main driver in 2018.
-Global advertising demand was strong in countries enjoying a robust economic environment (Ad Spending: USA +7.5%, China +12%, Russia +14%, India +14%) while Western Europe lagged behind due to low economic growth and political uncertainty, but double-digit digital growth and a boost in TV sales thanks to the FIFA World Cup ensured decent growth in Western Europe nevertheless (+4.8%).
-67 of the 70 markets analyzed by MAGNA showed some level of growth in 2018, with Singapore, Peru and Bahrain the only markets to shrink. The fastest-growing markets were Argentina and the Ukraine (resp. +20% and +25%) but that was mostly driven by economic hyper-inflation. Many emerging markets grew by double-digits: India (+14%), Egypt (+16%), Vietnam (+11%) and Brazil (+12%, helped by the presidential campaigns and the World Cup).
-Other media categories struggled to various degrees in 2018 as they did not benefit from the pricing power and cyclical drivers of television. Global Print NAR decreased by -11% to $55 billion. Radio ad sales decreased by -1% to $28 billion; the decrease in revenue was similar to the one experienced in 2017.
-The only “traditional” media category to show moderate growth in 2018 was, again, Out-Of-Home. Global OOH NAR is forecast to grow by +4.6% to $34 billion (including cinema). OOH did benefit from cyclical events but the main driver remains the organic growth of digital OOH inventory in premium locations and “placed-based” environments. DOOH NAR grew by +16% this year to reach $5.7 billion.
-For 2019, MAGNA forecasts global advertising to grow for the tenth consecutive year. The growth rate will slow down to +4.7% to reach $578 billion (+$26 billion) mostly due to the absence of major cyclical events. Excluding cyclical events, the 2018 growth would be +5.8% i.e. only marginally, below 2018’s growth rate (+6.1%). The lack of cyclical events will mostly affect offline media sales (-2.4% to 293 billion) while digital media sales will grow by +13%.
-The 2019 slowdown will mostly come from North America (declining from +7.4% in 2018 to +2.5% in 2019 due to the lack of cyclical events) and Western Europe (from +4.8% to +3.6% due to economic uncertainty) while emerging markets will only marginally slow down (from +11% to +9%).
FIG. 1 – GROWTH FORECAST IN KEY REGIONS AND SELECTED MARKETS
FIG. 2 – US MARKET FORECASTS