Zenith Forecasts 4.3 Percent Adspend Increase as Audiences Shrink

Zenith is expecting that advertisers will increase their global expenditure by 4.3 percent in 2020, just slightly above 2019’s rate, a rather weak forecast given the presence of the Summer Olympics, UEFA EURO 2020 and U.S. Presidential elections.

Zenith’s Advertising Expenditure Forecasts report finds that the global ad market will reach $666 billion by the end of the year. The 4.3-percent growth rate for 2020 is barely above 2019’s 4.2 percent, which the firm calls “a big disappointment.” The trade war between the U.S. and China is disrupting economies around the world and will prevent the global ad market from achieving its potential in 2020.

Zenith expects advertising expenditure to grow behind the global economy as a whole for the next three years.

The market poised for the highest growth in adspend by regional block for 2019-2020 is Eastern Europe and Central Asia, at 6.7 percent. Adspend in this part of the world has been growing at double-digit rates since 2016, as key markets have been recovering from the disruption caused by conflict in Ukraine, subsequent sanctions, a sharp drop in oil prices and devaluation of local currencies. Now, the recovery phase is over.

Fast-track Asia has enjoyed high single-digit or double-digit growth since 1996 and was barely impacted by the 2009 downturn. Growth is slowing, however, now that some of the region’s markets, notably China, have achieved substantial scale. Zenith forecasts 5-percent average annual growth between 2019 and 2022.

North America is set to grow by 4.7 percent, making it third. Adspend grew by 8 percent in both 2017 and 2018, followed by 5-percent growth in 2019, and Zenith forecasts continued 5-percent annual growth to 2022.

In Latin America, the report estimates that adspend has shrunk by 20 percent in 2019, and forecasts another 20-percent decline for 2020, followed by 10-percent declines in 2021 and 2022. This will weigh on Latin America’s overall growth rate, which is forecasted at 4.5 percent between 2019 and 2022, boosted by strong growth from Mexico.

Japan, meanwhile, saw its ad market spring to life in 2018 with 6.2-percent growth, its best result since 2005. The firm doesn’t expect this sort of growth to persist but is more optimistic for the next few years. For 2019 to 2020, 3.5-percent growth is forecast, with a forecast of 2.8 percent to 2022 on average.

In Western and Central Europe, Zenith estimates growth at just 1.7 percent in 2019, followed by 2.8-percent average growth to 2022. Advanced Asia (Australia, New Zealand, Hong Kong, Singapore and South Korea) saw adspend growth stronger than expected in 2018, ending the year at 4 percent but has slipped back to 1.4 percent in 2019. The forecast is for 3-percent average annual growth for Advanced Asia to 2022, assuming mild recovery in Singapore from 2020.

For the MENA region, adspend shrank by 47 percent between 2014 and 2018 and is forecast to decline by another 4.8 percent by the end of 2019, before the market stabilizes at 0.4-percent growth in 2020 and then grows by 1 percent in 2021 and 2022, which would be MENA’s first substantial growth since 2014.

The U.S. is expected to be by some distance the leading contributor of new ad dollars to the global market over the next three years, followed by China. Between 2019 and 2022, Zenith forecasts global advertising expenditure to increase by $89 billion in total. The U.S. will contribute 44 percent of this extra ad expenditure and China will contribute 12 percent, followed by India, the U.K. and Japan at 5 percent each.

Examining the ad market by medium, internet advertising overtook advertising on traditional television in 2016 to become the world’s biggest advertising medium, accounting for 35 percent of total ad expenditure. Despite its size, internet adspend continues to grow rapidly, with 11-percent growth in 2019. Zenith forecasts 10-percent growth in internet advertising in 2020, and an average of 9-percent growth to 2022, when it expects internet advertising to account for 54 percent of global adspend, up from 47 percent in 2019.

Television was the dominant advertising medium between 1996 and 2015. In 2016, however, the internet overtook television to become the largest advertising medium. Television’s share peaked at 38.7 percent in 2012, fell to 29.2 percent in 2019, and will be 25.8 percent in 2022, its lowest share on record.

Zenith predicts that in 2020, the commercial audiences supplied by media owners will shrink by 1.6 percent, fuelling a 6.1-percent increase in media prices. Traditional mass audiences are shrinking: first print, and now television in key markets. Many lost audiences are replacing television viewing with non-commercial video like Netflix, Amazon Prime Video, HBO, and eventually Disney+, reducing available audiences and creating fragmentation. “The days when we could find audiences all in one place are long gone,” said Matt James, global brand president at Zenith. “Now, however, technology empowers us to find them wherever they are, online or offline, and win back value for our clients through efficiency and effectiveness—by ensuring that we target and reach consumers with the right message at the right point in the consumer journey.”