U.S Advertising Growth Forecast To Slow In 2017
U.S. advertising growth is expected to slow this year, media forecast and strategy agency Magna reports in its Media Advertising Forecast Spring Update. Fueled in part by sports events and the election, the U.S. market grew 7.7 percent in 2016. This year, advertising sales are expected to grow 1.6 percent to $185 billion. Among promotional products distributors, 67 percent are expecting sales to be up in 2017, compared with 66 percent in 2016, as reported in PPAI’s Annual Estimate Of Distributor Sales.
Magna forecasts global advertising sales to grow 3.7 percent in 2017, down from 5.9 percent last year. It attributes the bulk of the slowdown to the lack of large cyclical events like the U.S. election and global sporting events this year, and the performance of the U.S. market itself. However, when the impact of those events is excluded from both 2016 and 2017, Magna notes that 2017’s underlying slowdown is minimal, from 4.9 percent growth in 2016 to 4.7 percent growth this year. And advertising growth is expected to accelerate in 2018 to 4.5 percent, with the Football World Cup in Russia, mid-term U.S. elections and the Winter Olympics in South Korea.
Vincent Létang, executive vice president, global market intelligence at MAGNA, and author of the report, says, “The record level of growth in 2016 globally, outperforming economic growth, was caused by marketers willing to embrace the new opportunities offered by digital media (search, social, video, programmatic) on a larger scale, while anxious to preserve their share of voice on traditional linear television, despite rising CPMs costs. In 2017, both digital and offline growth will slow down. Online advertising sales will nevertheless continue to grow by double-digits in most markets (globally +13 percent), but television ad sales will decline (-1 percent) due to softer price increases, ratings erosion and the lack of global sports events.”
Digital media has become the No. 1 category in advertising revenues, and most of that (54 percent) comes from impressions and clicks on mobile devices. Online advertising sales are forecast to grow 14 percent in 2017, reaching $204 billion and 40 percent of total ad sales. Within online advertising, mobile should reach $110 billion. Video and social formats will continue to drive digital advertising growth, posting increases of 30 percent or more, while paid search will grow by 13 percent to remain the top format and account for almost half of digital ad sales.
Offline advertising sales—television, print, radio and out-of-home—are expected to slip two percent in 2017. For the first time since 2009, television ad sales are expected to decline this year, by one percent. Television remains the No. 2 advertising category, globally, commanding 36 percent of total ad sales. Read more on Magna's findings here.
Promotional products sales continue to show strong sales growth. In its annual sales report, PPAI found that promotional products reached a record $21.3 billion in 2016, continuing an upward trend that began in 2010. More than half (58 percent) of all distributor companies reported better profits for 2016 than the year before, and smaller distributors, those with sales under $2.5 million, had a particularly strong year, reporting a 4.86-percent increase in sales volume over 2015. Look for more highlights from the report, plus analysis, commentary and an anecdotal forecast on 2017 sales in PPB’s July issue available later this month.