Ad Spending Forecast to Rise in 2016

Global ad spending next year  will increase by an average  of 4.2%, according to a new report released by research  frm Schonfeld & Associates.  Model data also shows that the  2016 average ad-to-sales ratio  – which measures ad dollars  spent as a percentage of total  revenue – will reach 2%.

“It’s fairly modest growth,” said Carol Greenhut, president  of Schonfeld & Associates.

“We’re seeing a little more  growth every year, and we are  returning to spending levels  seen before the recession.  The industry is shifting from  traditional media to Internet  spending. There’s a lot of  spending going on, but not in  the same places.”

According to Schonfeld,  the top ad category next year  will be the automotive industry,  which will spend over  $44 billion in advertising – a  year-over-year jump of 2.8%.  Key brands like Ford, General  Motors, Honda, Toyota, Nissan  and Volkswagen will all spend  at least $2 billion on advertising  in 2016. Other leading advertisers will include large  diversifed food companies and  the wireless communications  industry, which will spend  $30.7 billion and $23 billion  on ads respectively next year

In contrast, Schonfeld expects  the pharmaceutical industry  will decrease ad spending by  1.7% next year to $21 billion, a  signifcant reversal compared  to past trends.

The industry with the highest  average ad-to-sales ratio  will be the consumer products  sector, which is poised to  spend 6.5% of its total sales  on advertising in 2016. The  communications, products  and services sector, along  with the computers/software  and health-care industries  will have ad-to-sales ratios of  greater than 3%, as well

Drawing spending data from  publicly-reported information,  the Schonfeld report forecasts  ad spending and accompanying  ratios for more than 5,000  companies across 320 industry  segments. – CR