GroupM Raises U.S. TV Spending Forecast

Global ad growth slows but little Brexit impact seen
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Media buying giant GroupM has raised its forecast for U.S. TV spending in 2016 to 3.4% growth from 2.3%.

The enhanced outlook is the result of more aggressive political spending on local TV as well as a return to low single-digit growth in national TV, the agency said in a new report.

The increased national TV spending is coming from some shifting in spending from digital in the consumer packaged goods category as well as continued spending growth from the heavy TV-centric pharmaceutical sector, GroupM said.

For 2017, GroupM says it expects TV growth to decline to 2.1% as local TV cools off in a non-election year.

The healthier TV market is also powering better than expected advertising spending overall in the U.S. for 2016. GroupM now estimates ad spending growth will be 3.1%, up from 2.7%

Digital investment will continue to grow at three times the rate of overall advertising spending but will be lower than the double-digit levels seen in recent years.

“The combination of global economic headwinds coupled with moderate domestic growth as well as continued procurement pressure to extract media efficiencies and cost savings will confine ad market potential to its current low-single digit growth levels,” the GroupM report said.

Those global headwinds have GroupM trimming its worldwide ad outlook for 2016. With the China and Brazil markets cooling, the new prediction is 4% growth, compared to an earlier 4.5% growth forecast.

For 2017, GroupM sees ad volume rising 4.3% to $552 billion and total marketing services topping $1 trillion for the first time.

GroupM says India remains the fastest-growing large economy in the world, increasing at a 14% to 15% rate in 2016 and 2017.

The author of the forecast, GroupM futures director Adam Smith, kept a close eye on Britain’s decision to exit the European Union.

 “At this time, there is no tangible evidence of a Brexit effect in macro indicators nor budgeting decisions. However, in the next six months to a year, it is likely companies will invest less.  Job creation, wage growth and productivity will be lower than it otherwise might have been.  This is a difference of degree, not magnitude,” said Smith. “There is no evidence of a Brexit-driven recession at the time of this writing, and though some have deferred 2016 advertising investments, worst-case we still see that U.K. advertising growth will reach 4.5% this year, propelled exclusively by the growth of digital. Our base case remains 6.3%, which we will revise as usual in November."

(Photo via Money-401(K) 2012's Flickr. Image taken on June, 27, 2015 and used per Creative Commons 2.0 license. The photo was cropped to fit 3x4 aspect ratio.)

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