A Snapshot of Global Advertising Trends

Research

In the field of internationally expanding advertising expenditures, IHS Markit foreshadows that Germany will have an increase of 1.7% for a total volume of $20.1 billion.

IHS Markit, world leader of analytics and critical information, forecasted that advertising revenue will grow 7.1% to total $532 billion in 2016. Due to a strong global economy and increase of private consumption, advertising markets have benefited, leading to an overall increase of 2.4% in real terms, making it the highest level since 2007 (excluding 2014).

According to Elena Marouli, principal analyst and author of the IHS Markit report, televised events such as the Rio Olympics, the Euro Cup, and the US elections, aided advertising growth due to mass spending on television advertisements.

Overview of the Strong Concentration in the Market

The Top 10 advertising markets contribute to $406 billion in total and represent a market share of 75% of global advertising sales. The US leads the market by a large margin which is proven by its own yearly turnover of $179 billion, a third of the worldwide sales. After the United Kingdom, placed 4th, Germany earned $20.1 billion in sales with a growth prognosis of 1.7%.

However, in terms of ad revenue per capita, Germany finds itself in the middle of the market with $236 per capita, whereas, Israel ($719 per capita) and Switzerland ($555 per capita) are the worldwide leaders. An interesting aspect to consider is that China, the second biggest market shareholder after the US, only invests $65 per consumer.

Overall, the market shares of the Top 10 in 2016 decreased by one percent, which could be the result of a slowdown in the Chinese and Brazilian economies in this year.

Winners and Losers of 2016

According to IHS Markit’s Top 5 growth champions, Argentina has shown immense progress with a growth of 29.5% which is closely followed by a slew of strong African nations, such as, Mozambique, Ghana, Kenya and Malawi. Even though the percentages are fairly below the high standards set by the Top 10, these countries have grown due to many media companies’ expansion plans which could be the start of a major upward trend.

However, some countries have experienced a downturn of media growth by a market loss of 6%-13%. These countries include Kuwait, Oman, Azerbaijan, Belarus, and Libya.

Germany: Leaders in Print

In an analysis of market profits determined by media channel, Germany emerged as a key player in the print market, which globally holds a fifth of overall sales. With 34% of its advertising revenue share in Print, Germany considers Print as most important. In contrast, the US, the biggest market shareholder, only has print sales of 13%.

TV: Number one medium globally

Even though there is tremendous growth of online giants like Facebook, Google or Snapchat, the TV market continues to grow and benefit from big brand budgets. This is the reason why the TV market remains the largest advertising category with 36% of total worldwide sales ($192 billion). For Japan, TV is the most important medium with 43% contributing to their overall sales and in Germany TV is only in third place with 25% after Print and Online.

Differences between Cinema, Radio, and Out of Home

For the German media market, are mediums, radio (4%) and Out of Home (5%) at the same level regarding relevance. However, there are strong differences in the Asian market. For instance, in the Japanese media market, Out of Home is the third biggest profit machine (16%), whereas in China, radio is considered more important (16%). Whether for international or national media marketing, Cinema advertising contributes a little bit over 1% of overall sales globally.

Online Media: A Sales Driver

The second biggest and fastest growing medium is online media. However, IHS Markit is awaiting a slowdown of online media growth, since key players like Google and Facebook are not able to shift TV advertising budgets over to the Online Video sphere as quickly as expected.

The Market is growing, Online Media gaining Momentum

For 2017, IHS Markit is expecting a global sales volume of 11,1% of a total of $590 billion. The biggest growth will be seen in the Near East, Africa, and the APAC countries. In some countries, especially the United Kingdom, online media is already making up half of the ad spendings. In the next five years it is estimated that online media will globally overtake the TV media spendings.

More information and interesting, interactive graphs can be found on: https://technology.ihs.com

Source: new business, Jan. 9th 2017