Dentsu slashes 2018 UK ad growth forecast by half

Dentsu slashes 2018 UK ad growth forecast by half

Dentsu Aegis Network has halved its UK adspend growth forecast for 2018, citing the Brexit process and a squeeze on household spending causing marketing budgets to be cut.

The company’s Global Adspend Forecast, published today, says UK adspend will grow by 2.9% to £21.9bn in 2018, down from a previous forecast of 5.9%.

In 2016, the year in which the UK voted in a referendum to leave the European Union, adspend grew by 6.1%. DAN has also downgraded its forecast for 2017 adspend to 3.2% from 4% previously.

The report said: "The Brexit process has done little to boost economic confidence and there are concerns that a squeeze on household spending may result in cuts to marketing spend." 

Since the Brexit vote, the UK government has begun negotiations with the EU over withdrawal ahead of a proposed leaving date of March 2019. DAN’s report said adspend is expected to grow by 2.9% next year.

Spend forecasts for 2018 have also been downgraded for other major global advertising markets such as the US (3.2%, down from 4%), Western Europe (2.6%, down from 3.6%) and Asia-Pacific (4.2%, down from 4.6%).  Of these, the only region forecast to grow faster this year than in 2017 is the US, which DAN says will have grown by 2.5% last year.

Globally, adspend is forecast to grow by 3.6% next year (down from a previous forecast of 4.3%), which is up against the 2017 forecast of 3.1% but down on actual growth in 2016 of 4.7%.

However, Jerry Buhlmann, DAN’s chief executive, said the forecasts show a market in "transformation, but not recession."

He said: "The challenge for brands is to navigate an uneven economic outlook alongside a rapidly evolving tech & innovation landscape. In many markets, disruptive innovation - from mobile, voice activation and new ad tech players – is still providing new sources of growth and we forecast this trend will continue into 2018.

"Succeeding in this environment requires global consistency through appropriate platforms and systems, while also the flexibility and agility to work with a wider ecosystem of tech-enabled solutions. It demands a relentless focus on understanding the consumer, using data to reach real people, driving relevance, addressability and business growth."

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