Global ad revenue delivers strongest growth in 8 years with 7.2% increase, per Magna

Dive Brief:

Global advertising revenue is projected to grow 7.2% in 2018 to $522 billion, the strongest growth since 2010, according to the winter 2018 update of Magna Advertising Forecasts. Based on the strength, Magna increased its forecast for 2019 advertising growth to 4.7%.
Digital ad sales jumped 17% in 2018, 1.5% more than previously forecast, to reach $251 billion, or 45% of global ad revenue. The growth was driven by search, which grew 16%, video with 29% growth and social media growing 33%. The digital ad growth rate is predicted to slow in 2019 to 13%, but Magna predicts digital media ad formats to account for half of global ad dollars by 2019 or 2020. Non-digital ad sales, including linear TV, linear radio, print and out-of-home, were flat at 0.2% growth at $301 billion.
U.S. ad sales grew 7.5% in 2018, reaching an all-time high of $208 billion, including a record $4 billion from the midterm elections. Digital ad sales rose 16.6% to surpass the $100 billion milestone and account for 52% of total ad sales. Non-digital ad sales were stable due to cyclical events, dropping 0.7%. U.S. ad growth is also predicted to slow in 2019 to 2.4% growth, mostly because of the lack of cyclical events.

Dive Insight:

Magna attributes the 2018 ad growth to a strong economic environment, retail sales and business confidence, which led most industries and brands to increase their marketing and advertising spend. Finance, food and beverage, pharma and technology brands increased their ad spend by 10% or more. Retail and personal care brands also increased their spend, while automotive, movies, restaurants and telecommunications brands reduced their ad budgets.

On the digital front, smaller advertisers are driving the growth, with major brands only accounting for 20% to 25% of total ad spending on digital platforms, like Google and Facebook, according to The Wall Street Journal. Concerns around brand safety likely led some advertisers to pull back their spend on some digital platforms. For 2019, CMOs are expected to be more proactive and champion customer data privacy, and use the care they take with customer data to differentiate their brands, according to Forrester predictions.

A separate forecast by WPP’s GroupM downgraded its ad revenue expectations because of challenges in the automotive and packaged-goods industries, according to the Journal. GroupM is forecasting a growth of 3.6% in 2019, down from earlier forecasts of 3.9%. GM announced last week that it would be eliminating 14,800 jobs in the U.S. and Canada, and stop production at some North American factories. Ford has also stopped the U.S. production of its Focus model and plans to import it from China.

In 2019, 64% of marketers are planning to increase their digital marketing budget “marginally,” 24% are planning to increase budgets significantly and 12% plan to reduce budgets, according to a recent Ascend2 study. Marketers list content marketing, search engine optimization, email, search and social ads, data-driven personalization, marketing tech and social media as their most successful marketing tactics.