Global ad spending next year will increase by an average of 4.2%, according to a new report released by research firm Schonfeld & Associates. Model data also shows that the 2016 average ad-to-sales ratio – which measures ad dollars spent as a percent 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.”
Per 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 diversified 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 significant 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.