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Digital advertising will spur strong industry growth through to 2021, says MarketLine

The global advertising industry registered healthy growth in 2016, contributing to a compound annual growth rate (CAGR) of 3% for the 2012 – 2016 period, according to research firm MarketLine.

The company’s latest report states that the US continued to be the largest region in terms of value, accounting for 41.3% of the global market. Despite being home to some of the largest economies in the world, Europe only achieved 22.1%, less than Asia-Pacific, which accounted for 26.8%.

Nicholas Wyatt, Project Leader for MarketLine, explains: “The global advertising sector has seen healthy overall growth in recent years, although it experienced a noticeable slowdown in 2015 following heavy spending during the 2014 FIFA World Cup. 2016 saw a strong rebound aided again by another major sporting event, the Olympics in Rio.”

The food, beverage and personal/healthcare segment was the biggest spender, accounting for 28.1% of the industry’s total value. This was significantly higher than the next largest segment, retail, which was less than half the size in dollar terms.

MarketLine forecasts that the industry will continue to see strong growth, with a CAGR of 4.6% through to 2021, peaking at 5.1% year-on-year growth in that year. Digital advertising will continue its inexorable surge, increasing in importance to both advertising agencies and those using their services.

Wyatt continues: “With the average time spent on mobile phones standing at approximately 90 minutes per person per day, and the average number of times people check their phones per day exceeding 100, digital advertising represents a lucrative avenue for growth. Millennials tend to consume content through digital platforms more than paper formats, meaning the potential for interactive and experiential adverts is high. As a more experience-based target audience, this assists advertising companies targeting these individuals for products, and social media campaigns that utilize platforms like Facebook and Instagram are increasingly vital thanks to the client targeting they offer.”

MarketLine expects Asia-Pacific to be the main driver of future growth.

Wyatt notes: “There is a strong correlation between GDP and advertising, meaning the Asia-Pacific region benefits particularly due to its fast-growing economies. Furthermore, an ever-improving 4G network in countries like Indonesia enables improved mobile access, and this provides an excellent avenue for targeted advertising. This will help spur growth in the region.”

– Information based on MarketLine’s report: Advertising Global Industry Guide 2017.