WFA Global Marketer Week 2014: Global advertising
spend & economic outlook, 2014-2015
Joseph Clift
Warc
Adspend around the world is set to see consistent growth over the years to 2015, reflecting a general
improvement in the broader economy, according to latest forecasts from Warc.
Overall, adspend is predicted to increase by +5.2% in 2014, reaching $554.5bn at current prices for the year.
This is a significant jump from 2013's growth rate of 3.2%, and is set to be reinforced by another strong year in
2015, during which global adspend is forecast to rise by a still higher 5.5%.
Total global adspend 2003–2015
Yr-on-yr (%) change (Bars)
15
US$ bn (Line)
700
600
10
500
5
400
0
300
-5
200
-10
100
-15
0
2003
2005
2007
2009
2011
2013
2015
Source: Warc Data & Forecasts (www.warc.com)
Warc collates actual advertising expenditure for 85 markets, and has produced forecasts for key markets for
2013–15. Using a combination of adspend data and broader GDP forecasts from the OECD and IMF, we set out
below some current ad industry trends.
All regions are set to record net adspend growth for 2014, with the strongest performance, in terms of annual
increases, coming from Central and South America. Elsewhere, Asia-Pacific's near double-digit growth
throughout the forecast period will see the region overtake Europe to become the world's second-largest
advertising region; it is forecast to account for $159bn in 2014, compared to Europe's $153bn. But both regions
will remain well behind North America, which is set to record adspend of just over $177bn this year.
TV holds steady
Within the individual media that contribute to these adspend totals, we forecast that TV will affirm its place as the
world's biggest ad channel in 2014, even with the rising popularity of digital over recent years.
2004
0%
6%
4%
2014
Newspapers
Newspapers
Magazines
9%
32%
26%
Television
Radio
37%
12%
Cinema
Outdoor
Magazines
15%
6%
Radio
6%
1%
6%
Television
40%
Internet
Cinema
Outdoor
Internet
Source: Warc Data & Forecasts (www.warc.com)
The channel has actually taken share in terms of adspend over the past decade, from 37% of the global all-media
total in 2004 to 40% in 2014. TV's adspend share varies from market to market, but maintains its preeminent
position in most; its share approaches two in three of every ad dollar spent in many South American and Asian
nations.
At the same time, in a bid to follow consumers' increasingly fragmented daily media usage patterns, advertisers
continue to shift budget to search, display, social, online video and – especially – mobile ads: digital touchpoints'
share of the global total is set to hit 26% this year, up from 4% in 2004. Moreover, in some mature markets, most
prominently the UK, internet has already become the largest single ad channel – a pattern that will likely be
repeated in more and more markets over the years to come.
Perhaps unsurprisingly, the biggest victim of these trends has been the print media: collectively, newspapers and
magazines accounted for 44% of global above-the-line adspend in 2004, a total that is set to drop to 21% this
year.
The economic outlook
This adspend growth reflects trends in the broader economy. Shaking off the effects of the global financial crisis,
GDP growth around the world is set to accelerate this year and next. Global output, from expanding by +3% in
2013, is set to rise by a further +3.7% in 2014 and by +3.9% next year; such consistent growth will be partly
powered by a marked improvement in performance by advanced economies.
Economic outlook, 2012–2015
Global
Advanced Economies
Emerging Market and Developing Economies
6
5.4
4.9
5
Yr-on-yr % change
5.1
4.7
4
3.9
3.7
3.1
3
3
2.2
2.3
2014
2015
2
1.4
1.3
2012
2013
1
0
Source: IMF Economic Outlook, January 2014
In particular, an uptick in GDP in the US will be a crucial factor in the global acceleration. The world's largest
economy, which still accounts for over 20% of total global output, is forecast to grow at an annualised rate of
+2.8% this year, a significant leap from +1.9% in 2013. Across the "advanced economies", as grouped by the
International Monetary Fund (IMF), there will be a jump in growth between 2013 and 2014, rising from +1.3% to
+2.2%; this is a sign that, after years of economic volatility through the after-effects of the credit crisis and
Eurozone debt problems, a broad-based economic recovery is gaining traction.
But, by contrast, growth is set to be proportionally smaller in the developing economies of Asia, Latin America
and Africa, which have faced a variety of headwinds to growth over the past year. Collectively, this bloc is
forecast to see an expansion of +5.1% in 2014 following +4.7% growth last year. While still representing a faster
rate of expansion than the advanced economies, this nevertheless represents a narrowing of the "growth gap"
between the two economic blocs.
Marketer optimism rises
At the beginning of 2014, marketers are more optimistic than they were this time last year, according to latest
results from Warc's Global Marketing Index, a forward-looking indicator based on data derived from a monthly
worldwide poll of agency and client-side industry professionals. The index tracks responses on three separate
issues affecting marketers: trading conditions, marketing budgets and staffing levels.
Global Marketing Index: Headline GMI* by
region
65.0
60.0
55.0
Global
Americas
50.0
Asia Pacific
Europe
45.0
40.0
Source: Warc Data & Forecasts (www.warc.com) (*Headline GMI combines data for trading conditions,
marketing budgets and staffing. Above 50 = improving conditions; below 50 = declining conditions)
In all regions, the Headline GMI metric, which synthesises responses on all three of the marketing issues,
registered a significant rise in late 2013: respondents recorded a reading of 55.0 in January 2013, rising to 57.9 in
January 2014. A reading of 50 implies neutral sentiment, suggesting that marketers now collectively feel more
positive than before on conditions in their industry – and that things are likely to improve further as the year goes
on.
The most striking trend across the year of GMI data is the improvement of sentiment in Europe. Headline GMI
there rose from a barely-positive 51.9 last January to 58.7 in January 2014. In Asia-Pacific, these readings
registered a less dramatic shift, up from 53.8 to 57.7, while North America registered a small decline from 58.0 to
56.5 over the same period. This is an early signal that Europe's marketers are becoming much more optimistic,
relative to their peers. It also represents the first time that marketers in different regions have been broadly
aligned in outlook since the start of the survey at the end of 2011.
Regional analysis
North America
North American adspend growth will remain consistent throughout the forecast period, rising from an estimated
+2% annual increase in 2013 to +4% in 2014, before growth is pared slightly to +3.5% next year.
North America adspend 2003-2015
Yr-on-yr (%) change (Bars)
10
US$ bn (Line)
200.0
180.0
5
160.0
140.0
0
120.0
-5
100.0
80.0
-10
60.0
40.0
-15
20.0
-20
0.0
2003
2005
2007
2009
2011
2013
2015
Source: Warc Data & Forecasts (www.warc.com)
A considerable improvement in the prospects for the US advertising market will underpin this trend. Overall
adspend in the US – still the world's largest ad market, accounting for over 40% of the world's total spend each
year – is set to increase +4% in 2014, a significant jump from the +2.4% recorded in 2013.
In particular, US adspend will see a boost from TV, up +4.5% in 2014, with the channel bolstered by extra
investment among advertisers around the Olympic Games and the midterm elections; meanwhile, internet
adspend will rise +12.7%. With the broader economy gathering strength, a recovery in the housing market well
under way and unemployment tracking down to 6.6% according to latest official data, prospects for the world's
largest ad market appear bright.
Canada, while a much smaller ad market, is set to record a similar performance to its neighbour in growth terms,
with all-media adspend up +2% in 2013 and +3.5% this year. Having weathered the global economic crisis of
recent years far better than most of its fellow advanced economies, the nation is forecast steady GDP growth of
+2.2% this year.
Latin America
Warc estimates suggest Latin America will remain the world's fastest-growing region for adspend across the
forecast period, reflecting rapid development in the region's communications industries. Adspend across the
region is set to hit +9.8% this year, up from +8.1% in 2013 – and reaching a total of $38bn. Prospects for 2015
are still better, with forecast growth of +11.6%.
Latin America adspend 2003-2015
Yr-on-yr (%) change (Bars)
70
US$ bn (Line)
45.0
60
40.0
50
35.0
30.0
40
25.0
30
20.0
20
15.0
10
10.0
0
5.0
-10
0.0
2003
2005
2007
2009
2011
2013
2015
Source: Warc Data & Forecasts (www.warc.com)
This outperformance will come despite the economy of Brazil, the region's largest, facing significant challenges.
Urban unrest, due in part to a perceived lack of infrastructure spending and government corruption, defined the
nation's political scene in 2013 and threatens to cast a pall over its hosting of the 2014 football World Cup: an
event that would usually have a positive effect on the host nation's economy and advertising market.
Latest forecasts suggests that the nation's economy will grow by just over 2% this year, following similar
expansion in 2013; these totals are well below the nation's own historical trends – its average GDP growth rate
from 2000–08 stood at 3.7% - and also the performance of regional rivals. Mexico is forecast +3% GDP growth in
2014.
Nevertheless, the Brazilian advertising market is expected to decouple from broader economic trends during the
forecast period, with the nation's all-media adspend set to rise +10.4% this year, up from +6.4% in 2013. The
impetus for this expansion will come from TV, Brazil's largest ad medium by far, which is set to rise by +11.6% in
2014. The strength of the nation's ad sector was also in evidence at the Cannes Lions in 2013. Brazil confirmed
its position as a creative powerhouse by being listed among the most-honoured nations at ad land's "Oscars",
taking two of the 13 Grand Prix; a Brazilian shop, Ogilvy Sao Paulo, was also named most creative agency of the
year at the festival.
Europe
Adspend growth in Europe is set to see a marked upturn throughout the forecast period, but will nevertheless be
generally slower than other regions. An apparent stabilisation in the debt crisis that caused much economic and
political volatility in Europe over recent years – and also led to many of the region's larger advertisers adopting a
conservative marketing strategy – should lead to an improvement in the business climate. Latest forecasts
suggest that pan-European adspend will reach +3.1% this year and +2.9% in 2015, following 2013's flat growth.
Europe adspend 2003–2015
Yr-on-yr (%) change (Bars)
20
15
10
5
0
-5
-10
-15
-20
-25
2003
2005
2007
2009
2011
2013
US$ bn (Line)
200.0
180.0
160.0
140.0
120.0
100.0
80.0
60.0
40.0
20.0
0.0
2015
Source: Warc Data & Forecasts (www.warc.com)
But the region encompasses a two- or even three-track recovery, with individual nations and economic blocs
recording markedly different performances, according to our economic and adspend data. The IMF predicts a
GDP expansion of just +1% this year for the Euro area – including France and Germany – while Russia is set to
rise by around +2% and the UK by +2.4%. Similarly, non-euro nations are set to outperform in terms of adspend
growth; Russian investment is forecast to expand by +10.7% in 2014, compared to +5.4% for the UK, while
Germany and France are both forecast slow growth of +1.2% and +0.4% respectively.
Russia's 2014 expansion will be driven by the positive effect of the 2014 winter Olympic Games, which it hosted
in February, and by the comparatively undeveloped state of its advertising market relative to the rest of the
region: Russia's annual adspend has recorded double-digit growth in nine of the last 10 years, with growth of
over +20% for five of these years. Nevertheless, the nation faces significant future headwinds in terms of the
broader economy, not least due to the lingering effects of high inflation – with the Consumer Price Index (CPI)
running at over 6% according to latest official data – and low domestic business investment. Recent guidance
from Russia's central bank also suggested that GDP growth could remain at or below +2% per year over the
period to 2016.
The UK's strong recent performance also comes with some caveats. The UK suffered more in the global financial
crisis of the late 2000s than its eurozone counterparts, and – unlike Germany and France – has yet to return to its
pre-crisis output peak. The sustainability of its economic recovery, which has driven mainly by consumer
spending and services rather than business investment and exports, remains in doubt. That said, the nation's ad
sector is unusually diversified, and is well-placed to benefit from advertisers' general shift towards digital. The UK
is forecast +12.7% growth in internet adspend for 2014, compared to +8.6% for Germany and +5% for France.
Meanwhile, the eurozone periphery, which suffered worst in the government debt crisis of recent years, will
continue to experience tough times. Both Italy and Spain are forecast GDP growth of less than +1% for 2014;
meanwhile, Italian adspend will face another year of contraction, predicted to be down -0.2% for the year, while
Spanish adspend is forecast to grow just +1.2%.
Middle East and Africa
This region will see a very varied performance throughout the forecast period, from registering a net decline in
2013 (-3.4%) to returning to strong growth this year and next, rising +4.7% and +7.6% respectively.
Middle East & Africa adspend 2003-2015
Yr-on-yr (%) change (Bars)
40
35
30
25
20
15
10
5
0
-5
-10
2003
2005
2007
US$ bn (Line)
30.0
25.0
20.0
15.0
10.0
5.0
0.0
2009
2011
2013
2015
Source: Warc Data & Forecasts (www.warc.com)
Improvements in network infrastructure – particularly in sub-Saharan Africa – and data collection will be primary
factors in the development of the region's advertising markets throughout the forecast period. But it should also
be noted that the Middle East and Africa remains the world's smallest region by far in terms of adspend, andis
expected to account for just under $25bn of investment in 2014.
TV remains dominant in the Middle East, home to some of the world's wealthiest nations in terms of per-capita
GDP. Broadcaster data suggest that viewers in the region watch 7.5 hours of TV per day – among the highest
rates in the world – with pay-TV set to penetrate 20% of Middle East and North African households by 2017.
Meanwhile, digital – especially mobile-first platforms – is gaining strongly across MEA as a whole. Analysis
released in early 2014 from eMarketer suggests that ecommerce sales are rising at a rate of +20% a year –
higher than anywhere except for Asia-Pacific – while social media adspend, an increasingly lucrative subset of
the digital marketing repertoire, will rise by +63.9% in the region this year – almost twice as fast as anywhere
else.
This advertising growth will be underpinned by generally improving economic conditions. Latest IMF forecasts
suggest that the Middle East and North Africa region will expand by +3.3% this year, with sub-Saharan Africa
growing by a still-quicker +6.1%.
Asia Pacific
Asia Pacific adspend is predicted to rise +7.8% in 2014 and by +7.6% in 2015, due in part to continued solid
performance from the region's largest economies.
Asia Pacific adspend 2003-2015
Yr-on-yr (%) change (Bars)
20
US$ bn (Line)
180.0
160.0
15
140.0
120.0
10
100.0
80.0
5
60.0
40.0
0
20.0
-5
0.0
2003
2005
2007
2009
2011
2013
2015
Source: Warc Data & Forecasts (www.warc.com)
The regional powerhouses of China and Japan in particular are forecast to perform comparatively well. China will
consolidate its position as the world's second-largest economy with a GDP increase of +7.5%, while the nation's
adspend will record still stronger growth, up +11.2% this year.
That said, the sustainability of China's run of economic success – annual growth routinely hit double digits
throughout the 2000s – is being increasingly questioned; concerns have been raised over the very high
proportion of GDP being generated by business investment funded by credit. Any "hard landing" for China
caused by deleveraging would have significant effects on the growth prospects for the region as a whole.
Meanwhile, aggressive measures by the Japanese government to address its long-term problem of deflation
appear to be bearing fruit, with the nation's CPI up by 1.3% a year, according to latest figures. More broadly,
Japan's economy is forecast to expand by +1.7% in 2014, while adspend will rise +2%. TV, which accounts for
around half of Japan's ad market, will also see growth of +2%. That said, there are significant obstacles to future
Japanese growth – not least from the rising political tensions between the two largest economies in the region.
Meanwhile, India is facing tougher economic times, with its annual GDP expansion dropping significantly from
around +10% in 2010 to just +3.2% by 2012. Growth is expected to pick up to +5.4% this year, but high inflation,
a slowdown in manufacturing and continued regulatory wrangles over foreign investment continue to dampen
growth. The nation's advertising market, however, has proved to be a bright spot, with an adspend expansion of
+11% forecast for 2014.
Resource-rich Australia is also making a good contribution to the region's advertising sector, with adspend set to
rise +3.6% for 2014. The nation also confirmed itself as a major player in ad creativity with 'Dumb Ways to Die', a
campaign from McCann Melbourne, an Interpublic-owned agency, taking five Grand Prix at the Cannes Lions in
2013 – and thereby becoming the most-awarded ad in the festival's 60-year history. More broadly, with low
unemployment by advanced economy standards of 6% and inflation holding steady below 3%, Australian GDP is
forecast to grow by around 3% this year, according to the nation's central bank.
About the Author
Joseph Clift is a Web Producer for Warc.