Zenith: Internet Advertising to Exceed Half of Global Adspend in 2021

Internet advertising is forecast to account for 52 percent of global advertising expenditure in 2021, exceeding the 50-percent mark for the first time, according to Zenith’s Advertising Expenditure Forecasts.

The predicted figure is up from the 47 percent of global adspend that internet advertising will account for this year, and 44 percent in 2018. The growth rate, however, is slipping quickly as the internet ad market matures. Internet adspend grew 17 percent in 2018, but activity in the first half of 2019 points to 12-percent growth for the year as a whole. By 2021, Zenith expects internet adspend growth to have fallen to 9 percent year on year.

Broadcast television, meanwhile, is beginning to shrink. Zenith forecasts traditional TV ad revenues to decline every year from now to 2021, falling from $184 billion in 2018 to $180 billion in 2021. Television’s share of global adspend peaked at 38.7 percent in 2012, fell to 30.8 percent in 2018, and will be 26.5 percent in 2021, its lowest share Zenith has on record.

Overall, Zenith predicts global ad expenditure will grow 4.6 percent in 2019, reaching $639 billion by the end of the year. The new forecast is slightly below the 4.7-percent growth rate previously predicted in March. The firm expects advertising expenditure to grow behind the global economy as a whole in 2019-2021, after it outpaced it in 2018.

Global adspend is now forecast to increase by $28 billion this year. Almost half this growth ($13 billion) will come from the U.S., which Zenith says is benefiting from very rapid growth in internet advertising, at 15.4 percent, ahead of the global average of 11.7 percent. China will be the next biggest contributor to growth, adding $4 billion in extra adspend, followed by the U.K. and India at $1 billion each.

“The point at which internet advertising exceeds 50 percent of global adspend has been approaching for some time, but this is the first time it has appeared in our forecasts,” said Jonathan Barnard, head of forecasting at Zenith. “However, 2021 will be the first year of single-digit internet adspend growth since 2001, the year the dotcom bubble burst.”

Taking a look by region, North America’s ad market is forecast at a healthy 5-percent annual growth to
2021. Latin America’s growth prospects are impacted by the Argentine peso continuing to lose value. Zenith forecasts 2.2-percent growth in LatAm adspend this year, but predicts an average growth rate of 4.3 percent a year to 2021, assuming that Argentina’s economy begins to recover in 2020, as commentators generally expect.

Western and Central Europe has seen solid growth since 2014, at 3 percent to 5 percent a year, and is expected to continue to grow at the low end of this range out to 2021. In MENA, a decline of 4.8 percent is forecast for 2019, before the market stabilizes at 0.4-percent growth in 2020 and then grows by 1 percent in 2021, which would be MENA’s first substantial growth since 2014. Adspend in Eastern Europe and Central Asia has been growing at double-digit rates since 2016, but now that the recovery phase is over, Zenith expects adspend growth to slow to 7 percent a year on average to 2021—though this will make Eastern Europe and Central Asia easily the fastest-growing regional bloc over this period.

Fast-track Asia—characterized by economies that are growing extremely rapidly—is forecast for 4.7-percent average annual growth between 2018 and 2021. This is less rapid than the growth in Eastern Europe and Central Asia, but Fast-track Asia is ten times larger, so it contributes a lot more to global adspend growth in terms of dollars. Japan remains stuck in its rut of persistent low growth, forecast for average adspend growth of 1.7 percent a year between 2018 and 2021, behind the average annual growth rate of 2.4 percent between 2013 and 2018. Advanced Asia— Australia, New Zealand, Hong Kong, Singapore and South Korea—ended 2018 at 4 percent and is forecast for 3.8-percent average annual growth to 2021.