GroupM has revised its global ad spending outlook downward for 2022, with most of the decrease tied to a slowdown in China.
Excluding U.S. political ad spending, the WPP PLC-owned agency now estimates that global ad spending will rise 8.4% this year, compared to the 9.7% growth projection it made last December.
GroupM forecasts that advertising allocations in China will increase 3.3%, down from 10.2% predicted in its December forecast. China accounts for 20% of global ad spending.
GroupM points to a "dynamic zero COVID-19" strategy in China as a reason for the slowdown, as lockdowns constrained the economy during much of the first half of 2022.
China's gross domestic product targets and economic policies are now focused on promoting consumption, infrastructure investment and growth in smaller cities, which should help drive growth in advertising as marketers broaden their geographic focus, GroupM noted. Still, advertising will be curtailed by policies restricting activities in real estate and education and attempting to curtail celebrity-focused "fan culture."
Efforts to regulate the largest digital platforms in China are also more generally likely to limit growth, according to the media investment agency's midyear report.
Publicis Groupe SA's Zenith Media Services Inc. also recently tempered its 2022 forecast. Zenith projects global ad spending will grow at an 8% rate, hampered by the impact of war-related disruption in Russia and Ukraine on central Europe. That is down from its year-end projection of 9% growth.
Regional changes
GroupM now predicts ad spending in the Asia-Pacific region will improve 5.7% overall this year, down from its previous 9.3% outlook. Backing out China, regional growth is forecast to be 9%.
Japan, the world's third-largest advertising market, is forecast to grow 8.5%, up from 5.6% predicted earlier. The forecast for growth in India remains unchanged at 22.1%. GroupM believes India is poised to rise from its position as the world's 10th-largest market to the seventh — ahead of Canada, Australia and Brazil — by 2025.
In North America, the advertising industry's largest region by total spending, GroupM projects the U.S. growth rate will be 10%, down from 10.8% predicted in December. The projections exclude contributions from direct mail and directories, as well as political advertising, which the agency believes will reach $13 billion this year, with outlays concentrated with local TV broadcasters and significant digital volume.
In Canada, GroupM forecast that advertising spending will gain 9.5%, up from December's 6.5% projection.
Europe and Central Asia is now expected to register an 8.5% increase, up from 7.8% predicted last December. Growth in digital spending is expected to boost spending in the U.K., which accounts for just under a third of the region's overall activity, by 9.3%, versus 7.3% predicted previously.
France's growth rate is expected to more than double prior expectations, at 11.1% versus 5.1%. On the downside, ad expenditures are forecast to fall by 1.6% in Italy, versus the 5% growth predicted in December, while Spain could recede to 10.6% from 11.7%.
In Latin America, 2022 ad spending is now forecast to gain 11.7%, versus 11.4% previously. The region's biggest market, Brazil, which accounts for about half of Latin America's total, is projected to add 13.3%, compared to the 12.0% predicted previously. Mexico, the second-largest country in the region, is relatively unchanged at 12.1%.
Connected TV growth
GroupM remains bullish on the prospects for advertising on connected TV platforms, estimating the platform will generate a 24% jump to $21 billion in ad spending this year, and account for 12% of all TV spending around the world.
The media investment agency said connected TV has brought some new advertisers to the TV market, including companies that otherwise might have allocated budgets to digital outlets.
All told, TV will notch a 4.4% advance overall, excluding the impact of U.S. political advertising.