John McLellan: Outlook for ad market is far from gloomy

With the remorselessly gloomy headlines about Britain's immediate economic future amidst the chaos of Brexit, it's heartening that some in the advertising world are taking a much more upbeat view of the UK's prospects.

Scottish Newspaper Society director John McLellan says forecasts for ad spending are 'pretty encouraging'. Picture: Neil Hanna

Global advertising giant Dentsu Aegis Network (DAN), which has a significant base in Edinburgh on York Place, has just published its forecasts for ad spending in major economies, and while recognising a significant dip from 6.4 per cent growth in 2016 to 4 per cent this year, DAN predicts that spending next year will increase by 5.9 per cent.

So it might not be back to pre-Brexit levels, but pretty encouraging when set against the backdrop of what now seems like relentlessly negative coverage.

• READ MORE: John McLellan: Scotland’s ad industry has plenty of fizz

Given nearly all DAN’s recent forecasts for global markets have been accurate to within a percentage point, it’s reasonable to assume there will be some sort of uplift in UK advertising, which is remarkable when so much of business activity relies on confidence in the marketplace which in turn has an immediate effect on investment in advertising and marketing.

If proof is needed that Brexit and any resultant instability is a two-way street, then predictions for the French, German and Italian advertising markets are growth of 3, 2 and 1.5 per cent respectively, compared to 2.6, 1.6 and 0.8 this year.

Further afield, the US is predicted to grow by 4 per cent from 3.6 this year, Australia up to 4.8 from 4.1, but China down to 5.4 from 6. Even the booming ad markets in Russia (9.8 per cent growth this year) and India (13) are expected to slow next year.

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But the big news is that advertising on mobile phones is set to overtake television for the first time, which is why commercial broadcasters like STV have been investing so heavily in mobile apps. The digital slice of the global cake is expected to hit 37.6 per cent next year (from 34.8) while TV is set to dip from just over 37 per cent to 35.9.

Even so, the non-digital market is still worth more than $350 billion worldwide, and the good news for TV producers is that the big growth within digital/mobile will be in online video.

Print newspapers still face a battle, with a predicted contraction of 6.9 per cent, although the decline is slowing after reductions of 9.4 and 8.3 in the past two years. Again, the report gives cause for optimism, recognising digital innovation in the UK print market which “continues to evolve and fight back with better practices, content generation, distribution and data”.

DAN also recognises UK publishers are benefiting from their reputations for trust as readers seek to make sense of the political uncertainty. I hope they’re telling their clients.

• John McLellan is director of the Scottish Newspaper Society and a City of Edinburgh Conservative councillor

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