Group M Forecasts Strong Rise in Digital Advertising

Spending on advertising is closely linked to economic growth. It’s this correlation that has caused GroupM to lower the outlook for growth in ad spending in several key regions for the rest of the year. But certain sectors of the ad market, especially digital, remain strong.

Earlier this year, GroupM had predicted a global spending increase of 6.3% for 2012. Now the firm says the overall figure looks more like 5.1% which would mean a measured media spending amount of $506.3 billion. For the U.S., spending will only rise about 3.6% or to a total of $152.5 billion. Previously, GroupM had expected U.S. ad growth of 4%. In addition, U.S. spending may rise only 3.1% next year.

GroupM Chief Investment Officer Rino Scanzoni says, "We attribute the decline in U.S. ad spending to a number of factors, including a loss of economic momentum, the global deterioration from all continents but particularly the Eurozone and political and fiscal uncertainty at home for the election and beyond.”

Looking at specific ad formats provides a better insight into what to expect for the rest of the year. For example, digital advertising will see growth rates ranging from 16–18% this year and 22% next year. As a result, digital advertising will account for 20% of all measured media spending by the end of next year. The U.S. search market will rise to $18 billion next year. This year, search will generate $16 billion in ad revenues.

These growth rates will be offset by continued trouble for other media formats. Print newspapers will likely fall to 16% of the ad spending market next year. Analysts also fear that TV, which has 43% of the global ad market, may be peaking as online video continues to rise.

[Source: GroupM Revises Global Ad Spending. Marketwatch​.com. 23 Jul. 2012. Web. 1 Aug. 2012] 
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.