Walter Hale takes a look at ad figures and works out what it adds up to for the print community.
Advertising is one of the great bellwethers of business confidence. So it’s reassuring to see that, despite the collective hysteria that has sparked a rollercoaster ride on the world’s stock markets at the start of this year, the world’s leading ad agency Dentsu Aegis is confident that, in 2016, advertising spend will grow globally by 4.7% - and 5.5% in the UK.
Beneath those encouraging headline figures, the picture for print service providers isn’t as bright, but it’s not that bleak either. Almost half of every pound spent on advertising in the UK last year went on digital media. In 2016, for the first time, digital will take a bigger share (51%) of the total spend than print. The digital boom is driven by mobile phone advertising, predicted to grow by 44.5% in 2016 after a 51.2% jump last year. TV ad spend was buoyant in 2015 and is likely to be so again this year.
Yet the agency was reasonably optimistic about out of home advertising, which it says probably grew by 3.9% in 2015. Last year was something of a landmark for outdoor advertising as, driven by digital advances, tighter targeting and eye-tracking technology that can tell advertisers how many people saw their billboard, how long they spent looking at it and even identify their gender and approximate age, it won more ad spend than magazines. Carat’s estimates suggest that outdoors is now the world’s fourth largest advertising medium after TV, digital and newspapers.
Big events can still sway spending and Carat is confident that the UEFA European Football Championships (especially with England, Northern Ireland and Wales all qualifying) and the Rio Olympics will stimulate a little action. The big known unknown hanging over marketing and advertising in the UK is the European Union referendum, which could both be a stimulant and a deterrent for companies unsure how the result will affect them.
Now for the not so good news. Dentsu’s report says: “Print media has shown bigger declines than originally anticipated with large retailers pulling spend. Key retail advertisers like supermarkets that traditionally spend in print are now operating in a period of ‘all out peace’ as the price wars have gone quiet. Spend to defend market has evaporated. Some tactical spend will come back but at an expected lower level.”
Exports may not have been a significant source of business for the UK’s print service providers but the more adventurous companies may be tempted by India, which will probably be the fastest growing major ad market in the world this year, with spending up 12% in 2016 after an 11% rise in 2015. Nearer to home, Ireland looks like an intriguing opportunity with ad spend soaring 6.1% in 2015 and 7.9% in 2016.
Individual advertising markets are growing - or shrinking - at wildly different rates across the world. Carat forecasts that the best Russia can hope for is to spend to remain the same, after a 14% fall in 2015. In contrast, the ad spend in Greece is expected to grow by 8.7% in 2016 after a drop almost as steep as Russia’s last year. The percentages may vary but the trends – away from print to digital – is clear across countries and continents. That is why so many printers are already offering digital options as part of their portfolio - and many more will choose to do so.
With the global economy so volatile, it is hard to know what to say about 2017. Yet one trend from the Carat report is clear. The growth in advertising spend in the UK is gently decelerating: in 2014, it soared 7.9%, in 2015, it probably grew by 6.4% and this year’s growth of 5.5%, while respectable, is smaller still. Yet given the shocks the global economy has been subjected to - the Eurozone crises (economic turmoil and refugees), terrorism, cataclysmic storms - this is not bad.
At this year’s World Economic Forum in Davos, one of the underlying themes was something called the “resilience imperative”, ie the need to make sure the world’s political, economic and financial ecosystems are better designed to withstand shocks. If they can do that,
it could perk up growth in advertising spend. It’s easy to be cynical about such talk but the 1000 leaders gathered in that Alpine resort may just do something about this pledge - if only because it’s in their own interest to do so.