Group M upgrades ad market forecasts for 2017 and 2018

The media-buying group also raised UK expectations for 2018 from 4.5% to 4.8% and forecasts a total investment of £19.8bn.

Group M also predicts that digital, "pure-play" internet will hold 60% share of UK ad investment in 2018 due to rising digital audience, growing e-commerce and marketer short-termism. 

"Advertising investment remains stable despite a fragile economy", Adam Smith, Group M’s futures
director, said. "The focus of marketers remains relentlessly short-term and arguably underweighted relative
to long-term brand building in broadcast media. This favours performance-oriented digital media which
continue to be the most robust growth story despite concerns over measurement, transparency, brand
safety and other issues".

As proof, both Facebook and Google have reported third-quarter global revenue results that have beaten expectations. 

"Though neither itemises their UK revenues, their success is in evidence in Group M’s view of investment flows," the media advertising group's report noted. 

While some advertisers paused YouTube investment early this year over contextual brand safety concerns,
Group M estimates two-thirds of those UK "pausers" have returned at normal investment levels. The remaining third may be lingering with addressable TV and other alternatives they found effective.

Digital media

To reach 60% of the pie, digital advertising investment will grow by 13.3% in 2017 and 9.8% in 2017, Group M predicts. 

A  notable area of growth within digital, which the Group M forecast highlights, is audio/visual content creation, now routine in campaign planning.

According to the IAB, "content and native" in digital media alone is a £1.3bn business; it grew 28% in 2016 and 14% in the first half of 2017.

Part of this growth will be due to price inflation due to greater demand and a rise in data and technology costs to enhance quality and ensure viewability. 

"The larger digital looms in share, the more vociferous and voluminous the challenge around
measurement, accountability and brand safety will be", Smith said. 

Another issue for digital in the year ahead, the report said, is the European Union’s General Data Protection Regulation which will take effect in May. It brings new definitions of "personal data" and new compliance rules (and penalties) which may make marketers more cautious.

'Legacy' media (TV, print, radio and out-of-home)

As an aggregate, "legacy media", including its digital components, will shrink 4.4% in 2017 and a further 2.0% in 2018, according to Group M.

TV is expected to drop, for the first time in five years, to 2.9% this year. But is likely to stabilise in 2018 thanks to slower audience loss and attractive price packages. 

Linear TV is not naturally a young medium and in 2017, Group M believes impressions among 16- to 24-year-olds will fall by 12%, and by 8% among 16- to 34-year-olds.

The report writers added the caveat that some of this loss in viewership may be overstated due to poor measurement of audiences across diffuse TV platforms, and the industry can look forward to some improvement with BARB’s 30-platform Dovetail measurement, due in March 2018.

This new method promises better measurement of video-on-demand, which has already shown good performance growing investment in 2017, due in part to online brand safety scares.

Beyond TV, the outlook for legacy media is tough. Group M trimmed its previous 2% forecast for OOH advertising growth to zero in 2017. For 2018, the view is slightly more positive at 2% – providing the promised improvements in effectiveness, automation and efficiency bear out for this medium. 

The outlook for national newsbrands is even more gloomy. Group M forecasts a plunge of 12% in 2017 and 8% in 2018. 

"Some hope for mitigating these revenue declines are pinned to PAMCo's Audience Measurement for Publishers which goes live in February. It will include a new ComScore element allowing planners to build schedules including Facebook Instant Articles and Google’s Amp," the report said. 

The industry needs to deliver better audience measurement to support media planning for performance and brand building alike, Nick Theakstone, chief executive of Group M UK, said: "As ever, we lend our full support to industry initiatives like BARB’s Dovetail and PAMCo’s AMP."