The Strategist

Online advertising was the new black in 2016, British retailers confirm

12/15/2016 - 14:49

In the fourth quarter of the outgoing year, British business will spend on Christmas advertising more than 5.5 billion pounds, up 300 million more compared to the same period last year.

Almost half of these funds, that is, about £ 2.7 billion, will be spent on marketing in digital media. At the same time, Google Inc. and Facebook will be main beneficiaries of the profits.

Analysts predict that cost of online advertising in the fourth quarter will grow by 14% compared to last year's period. In this market segment, cost of mobile advertising will increase by 36%.

Against this background, the television advertising market will grow by only 1% in annual terms.

Advertising agency of the second-largest British supermarket chain Sainsbury's pointed out that the company received 24 pounds of profit for every pound spent on Christmas advertising in 2014.

British department stores chain John Lewis estimated that since 2012 sales have increased by 35% due to successful Christmas marketing.

In September, Carat Media Group published an updated forecast of the global advertising market. Experts noted overall positive trend, supported by continued growth in the digital sphere in 2016. The trend will continue in 2017.

Basing on data obtained on 59 markets in North and South America, Asia-Pacific and EMEA (Europe, Middle East and Africa), Carat’s analysts predict advertising spending at $ 548.2 billion in 2016, which is 4.4 % more than last year. The positive trend has occurred thanks to intension of 2016. Particularly, it’s about such grandiose media event as UEFA Cup, the Olympic and Paralympic Games in 2016 in Rio, and the US presidential elections.

In 2016, almost all regions showed a positive trend with steady growth in North America (+ 5%), and strong recovery in growth in Russia (+ 6.2%). The US market continued to show stability (+ 5%) in connection with presidential elections, which provided $ 7.5 billion in additional costs. Despite a slight cutback caused by the referendum, the UK remains the largest advertising market in Western Europe, and demonstrates a steady growth (+ 5.4%), higher than the overall rate in the region of 2.9%. High rates are also observed in Latin America and Asia-Pacific regions in spite of decrease in the Brazilian market and "new" economic reality of China. Indicators of these markets accounted for 10% and 3.9% growth, respectively. 

Certain markets showed slight decline due to economic instability, yet overall steady growth of advertising investments will continue in 2017 and will reach $ 570.4 billion, 4% above the current figure. This process is linked to constant growth of digital media, leading on 13 markets. According to the forecast, it will show double-digit growth in 2016 (+ 15.6%), and will continue to grow by 13.6% in 2017. Taking into account impact of Mobile, Online Video and Social Media segments, costs on digital will reach 27.7% of total advertising spending in 2016, and will grow to 30.2% in 2017.

At the same time, TV retains the largest share in total array of advertising spending in 2016. The sector rose to 41.1% thanks to worldwide media event. However, this area will show more moderate growth of 2.3% in the next year, and share of TV will fall to 40.3%.


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