Canadian ad market to grow by 3.1% in 2017 with continued strength expected in second half of year and digital driving growth
15 Jun 2017
Dentsu Aegis Network published today its Ad Spend Forecasts – June 2017, based on data received from 59 markets across the Americas, Asia-Pacific, Europe, Middle East and Africa. In Canada, the research points to a stronger start to 2017 in the ad market than was seen in 2016, with advertiser confidence continuing to improve alongside greater stability in the economy. Expectations are for the second half of 2017 to see continued strength, contributing to full-year forecast growth in advertising spend of 3.1%.
• Digital has been the number one media in Canada since 2013 and is forecast to continue to increase at a year-on-year growth rate of 9.6% in 2017, and a further 6.6% in 2018. The key drivers of this growth are mobile, online video and social spend. Digital is predicted to reach US$4.2 billion in 2018, 45% share of total spend.Advertising expenditure in Canada is forecast to hit US$9.2 billion in 2018, with forecast year-on-year growth of 2.7%. The main driver of spend will be mobile media, which is forecast to increase by 20% year-on-year to reach US$1.9 billion—a 46% share of total Digital spend.
Commenting on the latest ad spend forecasts, Annette, Warring, CEO of Dentsu Aegis Network Canada, said:
“Digital has clearly become the default setting for advertisers with mobile leading the charge in the Canadian space. The impact of digital will continue to grow as technology continues to disrupt and drive innovation in the industry. New key areas of focus will gather speed including virtual reality, AI and voice activation. As these become more prominent, brands must ensure that they remain relevant by creating new value for their consumers.”
• The Canadian newspaper industry continues to see a decline in spend of 5.5% in 2017 and 3.0% in 2018, with media planning strategies shifting to support digital instead of printed formats .Newspapers in 2017 make up a 17% share of total spend compared to 43% for digital. Publishing houses like Post Media and Metro Media Sales have been pushing back with high-value propositions to entice advertisers to maintain spend levels, including an increase in added-value opportunities and flexibility in negotiations.
Global ad spend growth holds at 3.8% amid cautious near-term outlook
• From a global perspective, Dentsu Aegis Network’s ad spend forecasts signal a more cautious economic outlook in 2017 than the previous year, with global ad spend growth falling from 4.8% to 3.8% (see Figure 1). However, conditions are set to improve in 2018 with forecast growth in ad spend of 4.3%. Events will play a key role in 2018, with events such as the Winter Olympics & Paralympics in South Korea, the FIFA World Cup in Russia and the US Congressional elections all expected to stimulate ad spend growth.
• Despite concerns about the economic impact of Britain’s decision to leave the European Union, UK ad spend growth held up better than expected in 2016 at 6.1%. While there are signs of caution in 2017, with growth dipping to 4%, 2018 is forecast to see growth bounce back to 5.9%. A similar picture unfolds in the United States, where a slowdown to 3.6% is forecast for 2017, followed by a slight improvement in 2018 to 4.0%. The United States also remains the largest market in the world, accounting for 37.7% of global advertising spend in 2017. Advertising spend in emerging markets continues to outpace developed economies. For example, ad spend growth in India is forecast to grow at 13% in 2017, while China is the second largest market in the world by share of advertising spend—remaining the only emerging economy to feature in the top five largest ad markets.
Mobile and digital become the new default settings
• Our forecasts show how digital technology continues to disrupt and drive innovation in the way brands connect with their consumers. In 2017, we forecast that advertising spend on mobile will overtake desktop, reaching 56% in terms of share of global Digital advertising spend. In 2018, mobile ad spend will grow further to account for a total of US$116.1 billion. With smartphone subscriptions set to reach 4 billion by 2025 and about a third of consumers reporting that their smartphone is their primary source of entertainment, we can expect to see this trend continue to strengthen.
• Furthermore, our forecasts suggest that in 2018 digital will be the top media in terms of global share of spend, taking over television for the first time. Digital’s share of total media spend is predicted to reach a 37.6% share in 2018 (up from 34.8% in 2017), versus 35.9% for television (down from 37.1% in 2017), amounting to a total value of US$215.8 billion. Reflecting the continued disruption by digital technology of the print media industry, Paid Search (advertising within the sponsored listings of a search engine) is forecast to overtake traditional print media (newspapers and magazines) in 2018. Print media has been on a downward trajectory for some years now, but will likely fall to a 13.8% share of total spend in 2018 (down from 15.1% in 2017) while paid search is forecast to grow to 14.6%, up from 13.6% in 2017.
Video, social and programmatic power innovation and growth
• While digital ad spend is growing rapidly and set to overtake television, within digital there are a number of new sources of growth that point to the future of advertising. For example, in 2017, online video is set to grow by 32.4%; social by 28.9%; and programmatic (i.e. automated ad buying) by 25.4%. Looking ahead, brands will need to embrace the potential of disruptive technologies such as virtual reality, artificial intelligence and voice activation. However, research suggests that only 8% of brands currently intend to use virtual reality for advertising purposes.
Media in Canada, Dentsu Aegis predicts 3.1% growth in Canadian ad market this year (PDF)
Grenier aux Nouvelles, La croissance du marché publicitaire canadien atteindra 3,1 % selon Dentsu Aegis Network (article available in French)
Isarta, Le numérique propulse le marché publicitaire canadien (article available in French)