Advertising spend is set to reach over $540bn this year, according to the latest forecast by a leading global media network.
Carat analysed data from 59 markets across the world, and found the increase in spend – or a 4.4% year-on-year growth – is powered by the ongoing growth of digital advertising.
While the UK’s advertising spend figures had a brief adjustment following the EU referendum, it will continue to be the largest advertising market in western Europe and the fourth globally, with a growth of 5.4% expected this year, the report said. This is – as it is in most regions – down to the growth of digital media, which will account for over half of the share of ad spend in 2016.
In the UK, online video is growing at 44% this year and is one of the most significant drivers in overall growth in the market, according to the study. Social media spend is also expected to rise by a third this year, with Facebook taking the lead and set to become the third biggest media platform in 2017, behind Google and ITV.
Paid search through mobile in particular will rise at about 10% this year and 8% in 2017, while tv advertising will also grow slightly by about 4%. Lastly, retail is forecast to increase spending by about 5% this year in the UK.
North America and Russia are particularly robust growth regions, which make up for lower expectations in other markets according to the research.
In North America, the forecast for the US advertising market has been revised up to 5.0% from 4.7% previously predicted, due to increased investments in the lead-up to the US presidential elections, which are forecast to generate over $7.5bn of incremental spend.
Advertising expenditure in Western Europe is expected to reach $94.4bn in 2016, representing 17.2% share of global ad spend and increasing by 2.7% in 2017.
Advertising forecasts are also set to remain strong in Latin America and Asia Pacific too, with 10% and 3.9% growth respectively in 2016.
Digital is now the leading media type in 13 of the markets that Carat analysed, growing at “double-digit prediction levels” of 15.6% this year. This is driven by the high demand of mobile, online video and social media, and digital spend it set to reach around 27% share of total global media spend this year. It’ll increase to a third by 2017.
The social media spending increase is down to various platforms’ enhanced ability to gather data and provide marketers with actionable insights to reach and engage with their target audiences. Since the launch of Facebook Live for all users, the popularity of live content has steadily increased with consumers watching live video three times longer than pre-recorded content.
Programmatic spend is forecast to increase by over a third in 2016 and further 25% in 2017. The report says this growth can be attributed to “the ability to deliver better business outcomes with access to all types of scalable inventory including premium video and social”.
“Following the negative press that open exchange inventory has been receiving, the industry is now deploying brand safety best practices and adopting a private marketplace strategy that is transacted programmatically. These private marketplaces are not only providing guard rails around brand safety, but also improving viewability metrics and assurances around inventory,” it added.
Display advertising isn’t dead either, despite the negative press, and it too is set to increase by at least 12% this year.
Globally, mobile ad spend will increase by about 48% in 2016 and by a third next year, surpassing Carat’s previous expectations.
As mobile advertising gets more sophisticated and gives access to insightful audience data, brands are increasingly investing in this media type and richer, native advertising formats are having the most impact, the study says.
According to Will Swayne, global president at Carat, digital and that data that comes from it “is redefining brands and agencies’ understanding of people’s behaviour and the ability to go to market with greater insight, addressability and agility.”