GroupM is back again with its latest investment report which not only shines a light on concerns for the digital publisher ecosystem, but highlights key growth areas and forecasts 2018 trends.
Next year global advertising investment is set to grow 4.3%, or US$23 billion, but despite that, the media investment group also thinks advertising's share of global gross domestic product (GDP) is set to fall marginally.
A large factor of this, GroupM believes, is a result of dollars being redirected from advertising into data and technology.
Up to a quarter of dollars that migrate from legacy to digital media goes into data and technology, says Adam Smith, GroupM’s futures director.
“This is not counted in a now antiquated concept of working media investment,” he says.
In terms of channel growth, GroupM expects investment in TV spend to grow 2.2% in 2018, but it will lose one share point.
Digital investment is expected to fall marginally from 11.5% to 11.3%, but its share will increase to 36.4%. It is expected to exceed investment in TV in 17 marketers - including Australia.
"Exceedingly bad news"
The report said at close of the third quarter, Google reported ad revenues of US$24bn and Facebook reported $10bn. With GroupM’s study of total worldwide digital investment and prior disclosures from these companies, it believes these two companies will account for 84% of all digital investment (excluding-China).
“GroupM also believes the two will account for 186% of digital growth in 2017,” the report says.
“This is exceedingly bad news for the balance of the digital publisher ecosystem. Amazon is on a fast-track to figure more prominently in the consolidation of digital ad investment with a few dominant players.
“Conservatively, GroupM believes the sum of Amazon’s on-platform search and display advertising combined with their off-platform advertising revenues is in the low single-digit billions.”
Programmatic not increased as quickly as expected.
Programmatic budgets have not grown as fast as anticipated, which GroupM attributes to concerns over supply chain integrity and brand safety.
“Advertisers are rightfully concerned over the murkiness of the programmatic supply,” the report says, outlining that a number of advertisers have moved to whitelist-only approaches although it limits reach and increases prices.
It supports the roll out of Ads.txt as a measure to protect advertisers, but calls out a number of programmatic partners (although not by name) that do not support preventions that protect advertisers from violent, sexually suggestive, or politically extreme content.
Radio is almost holding onto its share (4.4% this year, 4.3% next) as it is less disrupted and innovates with content and social media, the report said - while out of home (OOH) will grow to 6.3% in 2018.
The virtue in OOH
“As consumer attention continues fragmenting across platforms, many see virtue in one of the oldest advertising media, out-of home, which is also becoming more data-informed, digital and versatile,” the report noted.
It says the combination of location data with purchase, social media and viewing behaviour presents an “increasingly compelling proposition”.
It is growing share, from 6.1% in 2016 to 6.2% in 2017 and 6.3% in 2018 – the highest it has been since 1993. Apart from digital, it is the only medium growing share.
“2017 is a challenging year. Brands are operating in hyper-competitive and low growth markets, challenged to deliver in the near-term," GroupM global CEO Kelly Clark said.
"Legacy media continue to be challenged by audience fragmentation and competition from the dominant digital players, and those giants have grappled with their own far-reaching success as consumers misuse their user-generated platforms. Sitting between strained clients and stressed media partners, agencies understandably also saw challenges in 2017, but it would have been much worse for our clients had they not had us to help navigate marketplace dynamics.
"We believe marketers have an enduring need for objective partners who can operate across the whole media landscape to develop the most integrated campaigns, as well as to help shape standards, measurement and integrity.”
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