Dentsu Aegis Network’s ad spend forecast: digital will drive global ad spend to hit $563.4bn in 2017

However, the global ad spend growth rate is expected to fall from 4.8% to 3.8% for 2017. In 2018, things are set to look up with a forecasted 4.3% growth rate on global ad spend, with events like the Winter Olympics and Paralympics in South Korea, FIFA World Cup in Russia and US Congressional elections to stimulate ad spend growth.

The United Kingdom’s ad spend growth held up in 2016 at 6.1%, despite concerns around Brexit. Growth is expected to dip to 4% in 2017, however 2018 forecasts expect to see a rebound to 5.9%.

The US also remains the largest market in the world, with 37.7% of global advertising spend in 2017. Despite that, emerging markets continue to outpace developed ones in ad spend, with India set to grow at 13% in 2017 and China ranking second in the world by share of ad spend, the only emerging economy to feature in the top five largest ad markets.

Asia Pacific’s ad spend growth is set to hold at 4.3%, but with an improved outlook at 4.6% in 2018. Advertising expenditure in the region is also forecast to exceed the global growth rate in 2017 and 2018, reflecting the region’s increasing purchasing power in markets such as China, Indonesia, Philippines and Vietnam.

Mobile was set to overtake desktop, with forecasts to hit 56% of global digital ad spend in 2017. In 2018 mobile ad spend will hit $116.1bn, as smartphone subscriptions hit 4bn by 2025, and one third of consumers report using it as a primary source of entertainment.

Digital will be the top media in global share of ad spend in 2018, overtaking TV for the first time. TV is forecast to drop to 35.9% in 2018, compared to digital’s 37.6% share of global ad spend. Paid search is also set to overtake traditional print media in 2018, hitting 14.6% from 13.6% in 2017 and 13.8% from 15.1% in 2017 respectively.

Online video, social and programmatic buying is also set to grow, with video set to grow by 32.4%, social by 28.9%, and programmatic by 25.4%. While disruptive technologies like virtual reality and artificial intelligence need to be embraced by brands, only 8% intend to use VR for advertising purposes.

“We are reaching a tipping point in ad spend now as digital overtakes television, mobile overtakes desktop and paid search overtakes print. Digital and data must now be the default settings for advertisers. Evolving to people-based marketing rather than audience-based marketing and using data to increase addressability is essential for brands to manage tighter conditions in 2017 while positioning themselves for future growth,” said Jerry Buhlmann, chief executive officer, Dentsu Aegis Network.

“At the same time, the challenge for brands is to ensure that they are ready to embrace the potential of new innovation. As technologies such as virtual reality and voice activation become more prominent, brands must ensure that they remain relevant by creating new value for their consumers,” he added.