Dentsu Aegis Forecasts Improved Ad Spend Outlook for 2018
Dentsu Aegis Network’s latest Ad Spend Forecasts, based on data received from 59 markets, puts global growth at 3.6% in 2018, up from 3.1% in 2017.
Asia Pacific ad spend growth is forecast to accelerate to +4.2% in 2018, up from +3.5% in 2017. The region is forecast to be the leading contributor to global ad spend growth in 2018, contributing 39.7%, US$8.1 billion of the total US$20.3 billion incremental global increase, led by markets China, Japan, India and the Philippines (see table below).
Events will play an important role in 2018, Winter Olympics, Commonwealth Games, Asian games and state elections are all expected to stimulate ad spend growth.
Within this context, digital media channels continue to disrupt ad spend in 2018:
1. Digital media channels will continue to power ad spend growth, growing globally by 12.6% in 2018, versus 15% in 2017, to reach US$220.3 billion
2. Mobile will go from strength to strength, reaching US$121.1 billion having overtaken desktop as a share of total digital spend in 2017. Desktop will continue to lose global share (-1.5% since 2016), versus mobile’s gains (8.2% since 2016)
3. Digital overtakes TV, by a margin now exceeding previous forecasts. Digital ad spend will account for 38.3% share of total ad spend, TV 35.5%
4. Paid search accounts for the lion’s share (40%) of digital ad spend, with voice-activated devices helping to power its growth. Amazon's Alexa app was the top app for Android and iPhone on Christmas Day 2017, with the company claiming its devices enjoyed the best holiday season yet
5. Video (24.5%) and social (23.5%) will also drive growth within digital ad spend, powered by smartphone take-up and mobile-video in particular
6. Programmatic spend will rise by 23% as established players and startups compete over ad tech
Commenting on the latest forecasts, Jerry Buhlmann, CEO of Dentsu Aegis Network, said: “The latest ad spend forecasts show a market in transformation, but not recession. The challenge for brands is to navigate an uneven economic outlook alongside a rapidly evolving tech & innovation landscape. In many markets, disruptive innovation - from mobile, voice activation and new ad tech players – is still providing new sources of growth and we forecast this trend will continue into 2018.”
“Succeeding in this environment requires global consistency through appropriate platforms and systems, while also the flexibility and agility to work with a wider ecosystem of tech-enabled solutions. It demands a relentless focus on understanding the consumer, using data to reach real people, driving relevance, addressability and business growth.
Nick Waters, CEO of Dentsu Aegis Network Asia Pacific, said:
“Asia Pacific continues to lead the growth in digital ad spend. With the region’s fast adoption of technology and innovation, there will be a substantial shift towards mobile and smart devices. As a result, mobile online video ads will be the main drivers of growth within digital ad spend across the region.”
“Data continues to be central to our business in Asia Pacific and with better understanding of new technologies, structures and models for business growth, agencies must help brands move from being disrupted to disruptor.”
China, is forecast to contribute the second highest amount, US$4.6 billion (22.8%) to total new ad dollars in 2018 behind only the US. China’s advertising market is forecast to grow by +5.4% to reach RMB 607.5 billion – 15.2% of worldwide advertising spend. Advertising spend in China is forecast to grow by a further +5.3% in 2019 driven by Digital and OOH media spend.
Digital advertising spend is forecast to grow at a double digit rate of +15.9% in 2018 to account for a significant 60% share of total ad spend and reach RMB 365.9 billion. Alibaba, Baidu and Tencent dominate and together account for 64.1% of total Digital spending. Online Video is the ad format growing at the fastest rate, a predicted +31.3% in 2018.
Also, audiences are rapidly moving from PC to Mobile. The projected growth of Mobile and Mobile Online Video is 28.9% and 46.1% respectively in 2018.
Phil Teeman, CEO of Dentsu Aegis Network China, added:
“China is at the forefront of digital disruption with the pace of change accelerating. We must continuously transform our business and the spectrum of services that we offer our clients, harnessing the spirit of innovation.”
Table: Forecast ad spend growth rates by region and country.