MAGNA GLOBAL Forecasts Global Advertising Revenues to Grow by +3.9% to $513 billion this Year

BRICs and US Slow Down but Europe Recovers Digital Media to Become the #1 Media by 2018
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1. Globally, media owner advertising revenues are forecast to grow by +3.9% in 2015 to $513 billion. This is nearly one point lower than our previous forecast (+4.8% in Dec. 2014) and represents a slowdown from 2014 (+4.9%).

2. The one point slowdown in 2015 is caused slower growth than expected in several large markets and the absence of even-year events that generated extra ad spend in 2014 (Winter Olympics, US Elections, FIFA World Cup). Neutralizing this non-recurring effect, underlying global growth would be similar to last year's growth.

3. Of the 73 countries analyzed by MAGNA GLOBAL in this update, 70 are expected to see ad revenue increases and only three markets will experience decreases (compared to 13 in 2014). However we have slightly decreased the growth forecast in 55 countries. The biggest contributors to the reduction include two BRICs affected by economic difficulties: Russia, where ad revenues are now expected to decrease by -11%, and Brazil, now expected to grow by +4.4% (previously +5.9%). We also reduce the US growth forecast to +1.6% (compared to +2.7% previously forecast). Less significant adjustments include China (+8.1%, previously +8.6%) and Canada (+2.7%, previously +3.4%)

4. On the other hand, the biggest upward revisions come from Spain (+8.6%, previously +5.6%) and the UK (+5.6%, previously +4.7%). In those markets, ad spend has been even more dynamic than expected in the beginning of the year, leading us to increase our full year growth forecast. Other markets growing slightly faster than expected in 2015 include France (from -1.1% to +0.3%) and Japan (from +2.7% to +3.4%).

5. In the US, media owners advertising revenues will grow by +1.6% this year to $166.2 billion. Neutralizing the impact of the non-recurring drivers of 2014 (mid-term elections and winter Olympics), the underlying 2015 growth is expected to reach +3.0% i.e. an acceleration from 2014 (+1.6%) due to continued recovery in the US macro-economic environment.

6. As predicted, Western Europe advertising revenues will grow for a second year in a row (+3.0%) as high-single-digit growth rates in the UK, Spain, Portugal and Greece offset continued sluggishness in France and Italy. Our 2015 forecast for Eastern Europe is cut down to -1.8% ($19.5bn) to reflect the massive economic headwinds faced by Russia and Ukraine. In fact, excluding Russia, CEE growth would be +5.9% in 2015 (previously +5.1%).

7. Asia-Pacific will continue to experience mid-single-digit growth (+6.3% to $147.2bn) with resilient markets in China, Australia and Japan. Latin American advertising spend is forecast to grow by +9.9% (previously +12.9%) as Brazil's economic downturn pulled down ad spend in the first half of the year. With the slowdown of Russia, Brazil and- to a lesser extent - China, the BRICs are no longer the massive growth engine they were in the last five years. The combined ad growth for the four markets is now expected at +5.5% this year, down from +7.2% previously.

8. Digital media advertising is expected to grow by double-digits again this year again (+16% to $149 billion) driven by mobile advertising (+53% at $50.0bn), video formats (+38% at $15.4bn) and social formats (+38% at $22.7bn). Global digital revenues will reach 31% market share globally this year. Mobile advertising now accounts for 30% of total digital advertising and will reach 55% by 2019.

9. In 2014, digital media was already the #1 media category in 13 of the 73 markets analyzed by MAGNA GLOBAL, including the UK, Australia, Canada, Germany, China, Sweden and the Netherlands. This number will grow to 14 in 2015 and to 23 by 2018. Based on our long-term forecasts, digital media will catch up with television in 2018, when digital media reaches 38.0% of global ad revenues compared to TV's 37.7% share. This is one year earlier than previously forecast. In the US, digital will outgrow television revenues by 2017.

10. The growth of television advertising revenues will slow down in 2015 due to the absence of global sports events and US elections, the continued erosion of linear TV viewing in most markets, and the increasing competition of digital media formats. Global ad sales will grow by a modest +1.2% to $198 billion. Print ad revenues will continue their long-term decline with ad sales decreasing by -5.9% (newspapers) and -8.0% (magazines) respectively. Radio ad sales will remain flat (+0.8% at $32.7bn) and out-of-home media advertising will grow by +2.8% to reach $33.5bn. Combined traditional media ad revenues will decline by -0.8%, for the first drop since the recession of 2008-2009.


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