Updating its advertising investment forecasts for 2017 and 2018 across all formats and platforms, Group M now anticipates growth of 3.1% this year and 4.3% in 2018, an increase of $23billion next year. The company points to global GDP growth with rising consumer demand, fixed investment, industrial production and exports as contributors to its more positive outlook for 2018. However, the survey identified risks as being weak investment and productivity, as well as the spectre of excessive debt, which may deter policymakers from raising interest rates.
Looking specifically at television, Group M now calculates that TV ad investment will grow 0.4% in 2017 and forecasts 2.2% growth over the next 12 months. However, this would mean that TV would lose one share point this year and another next. Pinpointing why these trends are likely, Group M noted that China's regulated TV is a headwind; extracting China reveals TV growing 3% this year and 4% next, with share stable (41%). Importantly, said Group M, this meant advertising investment for TV content on traditional TV devices. The company added that it recognised that time spent with TV content remained healthy, but monetising those hours will get harder as audiences diffuse across platforms more quickly than the industry can create measurement solutions.
“Growth is wide, with more people working, but shallow with wages growing slowly. If the global economy sustains its rising demand for labour, it may reveal a widening skills gap. Then, competition should raise wages, spurring investment in productivity and helping inflation to finally surpass central bank targets,” said Group M futures director Adam Smith.
Looking at broader ad investment trends, the GroupM report showed that a large factor is the amount of money now directed to data and technology for consumer engagement in digital. “For every dollar that migrates from legacy to digital media, GroupM estimates 25 cents goes to technology and data. This is not counted in a now antiquated concept of working media investment,” Smith added. “We also know that in periods of low inflation, marketing money gets reallocated to promotion; this is a cyclical challenge, not a structural one.”