GroupM downgrades ad growth expectations

Canada’s newspaper, TV and magazine businesses showing declines.

WPP’s GroupM is now predicting more modest growth in the global advertising market this year and next.

In its twice-yearly ad investment forecast, the latest of which was released today, the agency group predicted that by year-end, investment will have grown by 4.3%, and in 2019 the global industry will see 3.6% growth. That’s down from 4.5% and 3.9%, respectively.

That means that by 2019, global investment is predicted to reach US$19 billion, rather than the $23 billion predicted earlier. The main factor in lower investment, according to feedback GroupM received across its global network, is stress on the auto category, as well as the lack of rebound in the amount of traditional media investment from CPG advertisers.

Canada is the sixth-highest contributing market to ad spend, with GroupM predicting it will add CA$15.1 billion to the industry next year. While most countries left their prior ad investment forecast unchanged, Canada did make some downgrades due to struggles in the TV and print sector.

The country, according to GroupM, has embraced more personalized and on-demand TV experiences as streaming revenue jumped 29% to $872 million. Unfortunately for traditional TV, this has coincided with a 10% drop in TV audiences and a 2% drop to cable and satellite revenue ($8.74 billion). GroupM described the current climate as one of “unbearable pressures on public funding structures that were not built for the digital age.” Broadcasters, according to the report, remain hopeful that 2019 will be better because they have begun to use more precise data segmentation and measurement tools in an attempt to attract more brands to invest in TV.

Additionally, the report stated, agencies are “still on high alert for potential new platforms emerging in the digital domain from companies such as Adobe and Accenture.”

While radio forecasts in Canada indicate a slight decline, GroupM noted that radio is extending its reach due to the rise in online radio platforms such as iHeartRadio and Radioplayer Canada, creating more opportunities for ad revenue.

In total, GroupM predicts digital will represent 55.2% of Canada’s media investment in 2019 ($8.3 billion), which is a rise of 31.8% from the confirmed 2017 totals. Television, meanwhile, will take 20.3% of the share, or $3.1 billion, which represents a drop of 3.8% over two years. Radio will represent 9.8%, or $1.5 billion, a decline of 0.8% over two years. Of all declining media, newspapers showed the sharpest drop, down 20.8% to $1.4 billion and representing 9.3% of the industry’s total revenue. Magazines will also post a sharper drop, at 14.3% over two years, down to $150 million in 2019 and representing 1% of the total revenues.

OOH, meanwhile, will see a modest increase in its contribution to the advertising market; it will increase by 6.6% to $665 million and represent 4.4% of Canadian ad spend.