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GroupM "This Year, Next Year" Reports Slow Global Ad Recovery in 5th Year

GroupM "This Year, Next Year" Reports Slow Global Ad Recovery in 5th Year This Year, Next Year futures report forecasts global media spend; Asia, Latin America, Middle East and Africa pull global advertising back over the line LONDON AND NEW YORK – GroupM, the leading global media management investment operation of WPP, issued its biannual This Year, Next Year futures report today, forecasting global advertising investments will reach $534 billion in 2014, a 4.5% increase over 2013. The company predicts investments in 2015 rising an additional 5.0% to $560 billion - finally exceeding the pre-crisis peak of 2007/2008 in real terms.

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FOR IMMEDIATE RELEASE August 14, 2014 GROUPM REPORTS SLOW GLOBAL AD RECOVERY IS NOW IN ITS FIFTH YEAR, ON TRACK TO MATCH 2007 HIGH POINT IN 2015 IN REAL TERMS This Year, Next Year futures report forecasts global media spend; Asia, Latin America, Middle East and Africa pull global advertising back over the line LONDON AND NEW YORK – GroupM, the leading global media management investment operation of WPP, issued its biannual This Year, Next Year futures report today, forecasting global advertising investments will reach $534 billion in 2014, a 4.5% increase over 2013. The company predicts investments in 2015 rising an additional 5.0% to $560 billion - finally exceeding the pre-crisis peak of 2007/2008 in real terms. Globally, ad recovery is in fact localized, with 17 markets accounting for 93% of expected ad growth in 2014. Even at its moderate 3.4% rate of ad investment growth this year to $162 billion, the United States contributes fully one-quarter of incremental ad dollars. China ranks second as it climbs a predicted 9.8% to $76 billion. Other countries making the cut include Nigeria, Kenya and Vietnam. “Many companies are still operating with very strong balance sheets,” said Dominic Proctor, President of GroupM Global. “Coupled with a rising general confidence and a specific comfort around digital marketing, though notwithstanding some geo-political uncertainty, we are seeing an uplift in some of the ‘older economies’ as well as the new.” Of marketplace performance, This Year, Next Year report editor Adam Smith stated, “Despite the slowdown in China's general economy from 2012, its consumer economy continues to expand. This, plus intensive digitisation of advertising, keeps China ad investment rising at or near double- digits, with no large print legacy to correct.” It is a different story in Western Europe, where 73% of the regional economy is in the Eurozone, in which demand remains suppressed by debt, internal imbalances and deflationary politics. In real terms, the Eurozone remains 20% below its 2007 advertising peak, and the hardest-hit 'periphery' of Greece, Ireland, Spain, Italy and Portugal, 47% below the peak. Smith added, “Western Europe, however, is the most-digitised ad region in the world; though this 2013 2014f 2015f NORTH AMERICA 168,764 174,391 181,367 yoy % 1.8 3.3 4.0 USA 156,251 161,629 168,338 yoy % 1.8 3.4 4.2 LATIN AMERICA 32,685 35,984 39,112 yoy % 4.3 10.1 8.7 WESTERN EUROPE 106,688 107,934 110,156 yoy % -0.5 1.2 2.1 CENTRAL & EASTERN EUROPE 18,881 19,760 20,588 yoy % 5.3 4.7 4.2 ASIA PACIFIC 165,361 175,912 188,428 yoy % 7.4 6.4 7.1 China 69,207 75,979 84,317 yoy % 11.0 9.8 11.0 MIDDLE EAST & AFRICA 18,662 19,914 20,709 yoy % 5.4 6.7 4.0 WORLD 511,041 533,895 560,359 yoy % 3.5 4.5 5.0 MEDIA SPEND FORECAST (USD bn) GroupM This Year, Next Year Worldwide, July 2014
may finally be maturing to judge by digital ad investment growth slowing from double- to high-single digits in 2014 and 2015.” Western Europe also has the world's most print-heavy advertising, though here, too, the downward adjustments to annual advertising investment are moderating from double- to mid-single-digits in 2014 and 2015. Elsewhere, GroupM notes that some members of its south-east Asia group (Indonesia, Malaysia, Thailand, Philippines, Singapore and Vietnam) face political and economic challenges, and this year will collectively slip from double- to mid-single digit ad growth. “This group will still contribute to the global ad recovery, but we are on alert for central banks ‘tightening into the downturn’ if inflation becomes a problem,” said Smith. India, Brazil and Russia remain among the faster-growing ad markets, though GroupM warns that its reduced Russia forecast – from an annual run-rate of 10% to 6% -- depends on no worsening in domestic affairs. TOP SOURCES OF MEDIA GROWTH IN 2014 (Selected by share of additional dollars x growth rate) GroupM This Year, Next Year Worldwide, July 2014 Forecast % share of world Ad investment USD bn uplift USD uplift growth rate % NORTH AMERICA 5,627 25 3.3 USA 5,379 24 3.4 LATIN AMERICA 3,299 14 10.1 Brazil 2,705 12 18.8 Colombia 632 3 13.3 WESTERN EUROPE 1,246 5 1.2 Greece 150 1 10.0 UK 1,285 6 5.4 CENTRAL & EASTERN EUROPE 879 4 4.7 Russia 557 2 5.9 Turkey 338 1 12.4 ASIA-PACIFIC (All) 10,551 46 6.4 Australia 396 2 3.2 India 805 4 12.5
NORTH ASIA 7,870 34 9.0 China 6,772 30 9.8 Hong Kong 674 3 9.4 ASEAN 707 3 5.5 Indonesia 395 2 19.1 Vietnam 216 1 14.2 MIDDLE EAST & AFRICA 1,251 5 6.7 Egypt 83 0 15.0 GCC and Pan Arab 259 1 5.0 Kenya 287 1 26.8 Nigeria 359 2 35.8 TOP QUARTILE 21,292 93 - WORLD 22,854 100 4.5 This Year, Next Year, is part of GroupM's media and marketing forecasting series drawn from data supplied by holding company WPP's worldwide resources in advertising, public relations, market research, and specialist communications. The full report is available for purchase from the publications section of the GroupM website. # # # ABOUT GROUPM GroupM is the leading global media investment management operation. It serves as the parent company to WPP media agencies including Maxus, MEC, MediaCom, and Mindshare. Our primary purpose is to maximize the performance of WPP’s media communications agencies on behalf of our clients, our stakeholders and our people by operating as a parent and collaborator in performance-enhancing activities such as trading, content creation, sports, digital, finance, proprietary tool development and other business-critical capabilities. The agencies that comprise GroupM are all global operations in their own right with leading market positions. The focus of GroupM is the intelligent application of physical and intellectual scale to benefit trading, innovation, and new communication services, to bring competitive advantage to our clients and our companies. Discover more about GroupM and its agencies online at www.groupm.com. MEDIA CONTACT: REPORTS EDITOR: Cindy Kerber Spellman, GroupM Adam Smith, Futures Director Office: +1-314-682-2055 Office: +44 20 79 69 40 83 Email: cindy.spellman@groupm.com Email: Adam.smith@groupm.com