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Zenith predicts that global ad expenditure will reach $581 billion by the end of the year, a revised forecast of an additional $1 billion from its previous one.
The firm expects advertising expenditure to grow behind the global economy as a whole out to 2020.
North America’s ad market has been growing “fairly steadily but unspectacularly since 2010,” Zenith said. The pace of change is set by the U.S., where advertisers spend 23 times more than they do in Canada. Adspend continues to grow in the U.S., despite uncertainties over macroeconomic policy and trade. Zenith expects North American adspend to increase 3.3 percent in 2018 and to average the same growth rate each year to 2020.
In Latin America, concerns about Argentia’s economic stability and a drop in the value of its currency has caused its ad market to go into reverse this year (when measured in U.S. dollars). Venezuela, which faces ongoing economic crisis, is still declining at a fast pace, but its “sustained collapse in adspend means that this decline weighs less on the regional total each year,” Zenith said. Overall, 4.9 percent growth is forecast in Latin America adspend this year, with an average growth rate of 4.6 percent a year to 2020.
Western and Central Europe has enjoyed “solid growth” since 2014, according to Zenith. Ireland and Portugal are among the strongest in Europe, with respective 8 percent and 5 percent growth forecast for 2018. Italy and Spain lag, with 2 percent growth forecast for this year. The U.K.’s ad market has held up better than expected so far this year, despite Brexit concerns—2.4 percent growth is expected for 2018 as a whole, up from 0.7 percent in Zenith’s last forecast. Overall, 2.9 percent growth is forecast for Western and Central Europe in 2018 and the same rate of average annual growth to 2020.
Zenith’s “historic” estimates of ad expenditure for MENA have been revised. Adspend shrank by 40 percent between 2014 and 2017, more than the previous estimate of 33 percent. Now, Zenith is forecasting an 11.5 percent decline in 2018, followed by a 4.9 percent decline in 2019, before the market stabilizes at 0.4 percent growth in 2020.
For Eastern Europe and Central Asia, adspend improved by 14.3 percent in 2017, which Zenith predicts to be the high point for the recovery. It forecasts 8.7 percent annual growth to 2020, ensuring that Eastern Europe and Central Asia remains the fastest-growing regional bloc over this period.
Fast-track Asia is 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.” Growth is expected to rise to an average of 7.6 percent a year to 2020. This is less rapid than the growth in Eastern Europe and Central Asia, but Fast-track Asia is ten times larger and therefore contributes a lot more to global adspend growth in dollar terms.
Japan behaves differently enough from other markets in Asia to be treated separately. There, Zenith forecasts average adspend growth of 1.9 percent a year between 2017 and 2020, behind the average annual growth rate of 2.5 percent between 2012 and 2017.
Apart from Japan, there are five countries in Asia with developed economies and advanced ad markets that Zenith has placed in a group called Advanced Asia: Australia, New Zealand, Hong Kong, Singapore and South Korea. Adspend growth slipped back to 1.9 percent in 2017, and 3.2 percent average annual growth is being forecast to 2020.
The U.S. will be the leading contributor of new ad dollars to the global market over the next three years. China will come second. Between 2017 and 2020, Zenith forecasts global advertising expenditure to increase by $75 billion in total. The U.S. will contribute 26 percent of this extra ad expenditure and China will contribute 22 percent, followed by India (5 percent) and Indonesia (4 percent).
Last year, internet advertising overtook advertising on traditional television to become the world’s biggest advertising medium, accounting for 37.7 percent of the total ad expenditure. As internet advertising matures, its growth is slowing down—though it still remains the fastest growing medium by some distance. Internet adspend grew 15 percent year on year in 2017 and is forecast to grow at an average rate of 10 percent a year between 2017 and 2020. By 2020, Zenith expects internet advertising to account for 44.9 percent of global adspend.
Television was the dominant advertising medium between 1996 (when it overtook newspapers with a 37 percent market share) and 2016 (when it attracted 35 percent of total advertising expenditure). In 2017, however, it was overtaken by internet. Looking at the ad market as a whole, including search and classified, Zenith believes that television’s share peaked at 39.2 percent in 2012, fell to 34 percent in 2017 and will be 31.2 percent in 2020, its lowest share since 1981.
