Blog Post

WPP: Global Ad Gains Slow A Bit, As Digital Captures Larger Share

Digital advertising — at least the portion that is measured – will make up a 17 percent share of all global advertising this year, a full point ahead of where WPP Group thought it would be in its December forecast. The ad holding company’s media unit, GroupM, issued its latest forecast today with the prediction that online advertising would rise about 15- to 16 percent a year, topping $100 billion worldwide in 2012.

Overall, GroupM expects global ad growth of 6.8 percent in 2012. The gains will be certainly driven by the summer Olympics, the U.S. elections (presidential and all 435 House of Representatives seats, with new boundaries) and the European soccer. The figure would have been even higher if it weren’t for the Mideast upheaval and fallout from the series of natural and nuclear disasters in Japan causing an additional degree of uncertainty to a weak global economy.

Putting digital growth in context, GroupM says that if online ads constitutes a fifth “BRIC” country and is the size of the other four nations combined.

In countries where it is most developed, digital accounts for 20 percent and more of measured advertising investment. And the growth isn’t likely to slow down, though economic uncertainty could result in some temporary stalls.

In terms of display ad growth, GroupM sees 12 percent gains this year for the U.S. and a 10 percent rise for 2012. Globally, those numbers are expected to be 14.3 percent and 12.4 percent, respectively.

GroupM’s numbers are particularly conservative in comparison to other recent forecasts:

— IPG’s Magna Global said in April that online ads would rise 18.7 percent.

— Zenith has called for global display ad spending to grow at an average of 16.4 percent a year to 2013, while paid search rises by 12.8 percent and classified by 10.2 percent.

–eMarketer, which recently revised its online outlook upward significantly from December, projected a 20.5 percent gain for online, adding that the lion’s share of those revenues will go to the five major ad-selling companies –Google (NSDQ: GOOG), Yahoo! (NSDQ: YHOO), Facebook, Microsoft (NSDQ: MSFT) and AOL (NYSE: AOL) — which will get 67.7 percent of total online ad spending in 2011.