1. TYNY July 2013 Digital Team 13/08/2013
Background & Details
GroupM has released its latest This Year Next Year (TYNY) report on the state of the global
advertising market, with an overall prediction that 2014 will see ad growth of 5.1%. In December
2012 the TYNY report predicted 2012 ad growth of 4.5%, but the reality actually was 3.6%. The
main reasons were the Eurozone periphery disappointing again and the exhaustion of Japan’s post-
Tsunami recovery cycle. The latest August 2013 TYNY report also revises 2013 down to 3.4%
growth from a previously predicted 4.5%. The Eurozone periphery - Italy, Spain, Portugal, Greece
and Ireland - is again the main reason. GroupM now expects this group to record an 11% fall in
measured advertising in 2013. This group accounted for 7% of global advertising investment before
the crisis. Now it is near 3%. This is a 40% fall in ad dollars although nominal GDP has barely
changed. The report also records reversals across northern Europe and the Nordics. Western Europe
is set for a 2.4% fall in aggregate advertising demand in 2013, against earlier hopes of a half-point
rise and we are no nearer any orderly resolution to internal Eurozone imbalances which might
restore confidence.
Implications
In the August 2013 TYNY the internet’s share of ad investment is stated as 17% for 2012 and 19%
for 2013. GroupM now also proposes 20% for 2014 and the growth rate for ‘interaction’ remains
consistent at around 14% globally. There is also a story playing out about the contribution to the
global advertising pot by industrializing nations and emerging markets. Since 2000 the
industrializing world has routinely contributed much more to advertising growth than is
proportionate to its share of the world economy. This is likely to continue. These forecasts do
however portray 2013 as a year of peak contribution - 80% of net new ad demand from 40% of
aggregate GDP. The forecast for 2014, and in modeling for the years beyond, is for more like a 60%
contribution. The older industrialized world shoulders a larger share of growth, and in particular of
course the USA, which this year despite fiscal contraction equivalent to 2% or more of GDP is still
expecting ad growth of 1.87%, and 2.9% for the mini-quadrennial next year. In other words, the USA
represents 17% of GroupM’s forecast net global ad growth in 2013 and 18% in 2014. Latin America,
in contrast, now represents 16% in 2013 easing to 12% in 2014. Within the industrializing world,
China’s pre-eminence as an advertising rainmaker looms ever larger, this year raising 40% of net
new global investment according to GroupM forecasts. There is similar support for sustained
advertising growth in Russia. Western advertisers’ share of investment in both countries remains as
substantial as ever, and even rising, according to standard industry monitoring sources.
Summary
Investment in digital media continues to grow at a consistent pace, despite the more turbulent
overall advertising market. The two leading themes of the latest report are online video’s
encroachment of linear TV, and, unsurprisingly, the unrelenting pressure on press media. Also,
interestingly, the themes which were expected to be evident but did not receive the emphasis
expected were the impact of the soccer World Cup and the Winter Olympics. Overall there is room
for optimism with the 5.1% prediction of growth for 2014, although this is tempered by the revised
down figure of 3.4% growth for 2013, from a previously predicted 4.5%.