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Geopolitical concerns and higher interest rates led GroupM to lower ad spending projections for 2019 - CNBC

Concern about the global economy has made its way to advertising budgets.

According to a new report from WPP's GroupM, global ad spending will increase 3.6 percent, or by $19 billion, in 2019 which is lower than the company's 3.9 percent projection from earlier this year. Growth in 2018 is also weaker than expected, rising 4.3 percent, down from a prior estimate of 4.5 percent.

Higher interest rates and China's slowing growth are among the factors that Group M, the world's largest media investment company, cited for lowering its projections. Potential trade wars are also a threat, particularly to automotive companies, which are typically among the largest advertisers. Meanwhile, many consumer companies aren't increasing their ad spending on traditional media like TV, radio, print and billboards.

A slowdown next year was already anticipated even before the latest macroeconomic and geopolitical concerns surfaced in a major way. That's because there are fewer big marketing events on the horizon. In 2018, advertisers had the World Cup, the Winter Olympics and the mid-term elections, which all attracted huge audiences.

In the U.S., ad spending is expected increase 2.9 percent in 2019. About 40 percent of ad budgets are allocated for digital, while 39.9 percent go to television. Brands will be tracking the impact of new restrictions on data privacy, following the GDPR regulations in Europe this year and with similar initiatives coming to California in 2020.

China is projected to lead global advertising revenue growth, with budgets increasing 5.5 percent. The country's advertising market, currently valued at $90 billion, has doubled since 2010 and is second to the U.S. India, Japan and the U.K. are also expected to add to the global increase in ad budgets.

GroupM handles more than $113 billion in advertising budgets on behalf of brands.

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