WORLD SCREEN
Zenith has forecast that global ad expenditure will grow 4.5 percent in 2018, reaching $581 billion by the end of the year, boosted by the Winter Olympics, FIFA World Cup and U.S. mid-term elections.
The forecast for 2019 is down slightly from its September prediction of 4.2-percent growth, now forecast at 4 percent, but the 2020 forecast is stable at 4.2 percent. The 2021 forecast is for 4.1-percent growth. Overall, Zenith expects advertising expenditure to grow behind the global economy as a whole throughout its forecast period.
By region, North America’s ad market has been growing “fairly steadily but unspectacularly” since 2010, the firm said. North American ad spend is expected to grow 3 percent in 2019 and to average 3.4-percent growth each year to 2021.
Latin America, where Argentina and Brazil have seen economic growth, is expected to see just 1.7-percent gains next year (as the Argentine peso continues to lose value). Zenith predicts an average growth rate of 4.1 percent a year to 2021 as the region picks up.
In Western and Central Europe, Ireland and Portugal are among the strongest, with respective 6-percent and 5-percent growth forecast for 2019, while Italy and Spain slightly lag the region as a whole, with just 1-percent growth for Italy and 2-percent growth for Spain forecast for next year. The U.K.’s ad market has held up better than expected so far this year, and Zenith now forecasts 4.4-percent growth for 2019 as a whole, up from 3 percent in its last forecast. Overall, the firm expects 3.1-percent growth for Western and Central Europe in 2019 and 3-percent average annual growth to 2021.
In the Middle East and North Africa (MENA), ad spend shrank by an estimated 40 percent between 2014 and 2017, more than the previous estimate of 33 percent. Accordingly, Zenith forecasts an 11.6-percent decline in 2018 and a 4.9-percent decline in 2019, before the market stabilizes at 0.4-percent growth in 2020. It is then expected to grow by 1 percent in 2021, which would be MENA’s first substantial growth since 2014.
There are healthy forecasts for Eastern Europe and Central Asia, where conflict in Ukraine previously disrupted key markets starting in 2014 but recovery accelerated to 14.3-percent growth in 2017. Now, Zenith forecasts 7.4-percent annual growth to 2021, ensuring that Eastern Europe and Central Asia remains the fastest-growing regional bloc over this period.
Fast-track Asia—characterized by economies that are growing extremely rapidly as they adopt existing technology and practices and innovate new ones while benefiting from the rapid inflow of funds from investors hoping to tap into this growth—has seen high single-digit or double-digit growth since 1996. Growth is slowing now that markets such as China have achieved substantial scale. Predictions are for growth to rise to an average of 6.2 percent a year to 2021. While this is less rapid than the growth in Eastern Europe and Central Asia, fast-track Asia is ten times larger, so contributes much more to global ad spend growth in terms of dollars.
Japan, meanwhile, remains “stuck in its rut of persistent low growth,” according to Zenith. As such, the firm expects average ad spend growth of 2.1 percent a year between 2018 and 2021, behind the average annual growth rate of 3.1 percent between 2013 and 2018.
Advanced Asia—Australia, New Zealand, Hong Kong, Singapore and South Korea—will see 2.3-percent growth this year. The forecast is for 3.4-percent growth in 2019 and 3.6-percent average annual growth to 2021.
Between 2018 and 2021, the firm forecasts global advertising expenditure to increase by $75 billion in total. The U.S. will contribute 29 percent of this extra ad expenditure and China will contribute 19 percent, followed by India (6 percent) and Indonesia (4 percent).
Last year, internet advertising overtook advertising on traditional TV to become the world’s biggest ad medium, accounting for 38 percent of total ad expenditure. As internet advertising matures, its growth is slowing, but it remains the fastest-growing medium by some distance. Internet ad spend is expected to grow 12 percent year on year in 2018 and at an average growth rate of 9 percent a year between 2018 and 2021. By 2021, it is expected that internet advertising will account for 47 percent of global ad spend.
Zenith believes that television’s share peaked at 39.1 percent in 2012. It then fell to 34 percent in 2017 and is expected to be 29.9 percent in 2021, its lowest share Zenith has on record.
“If we consider audiovisual advertising as a whole—television plus online video—we see that it is, in fact, consolidating its dominant share of display advertising,” Zenith said. “Television offers unparalleled capacity to build reach, while online video offers pinpoint targeting and the potential for personalization of marketing messages. Both are powerful tools for establishing brand awareness and associations. We estimate that audiovisual advertising accounted for 48.3 percent of display advertising in 2017, up from 43.6 percent in 2010, and expect its share to rise to 48.8 percent in 2021.”
