Zenith cuts ad spending forecasts

Global advertising spending in 2019 is expected to grow lower than a previous estimate, hurt by recession fears in the United Kingdom and Germany, despite strong growth in digital ad budgets in the United States.

Industry forecaster Zenith cut its forecast to 4.4% growth from 4.6%, blaming a weaker trading globally and slowdowns in Europe and Asia. Global ad spending rose 6.7% in 2018.

With major European economies teetering on a recession, owing to trade tensions and the uncertainty around Brexit, businesses have tightened their purse strings, in turn hurting advertising budgets.

Zenith, owned by French advertising group Publicis, forecast that global ad spending would reach $640 billion this year, with a 4.3% rise in 2020 and 4.4% in 2021, down from previous forecasts of 4.4% growth in 2020 and 4.3% in 2021.

The forecaster said it would normally expect an increase in ad spending in 2020, benefiting from US elections, the Summer Olympics and the UEFA Euro 2020 tournament.

“But given current political and economic uncertainty, brands are being cautious about committing to extra spending at the moment,” it added.

Zenith forecast a 0.6% decline for ad spending in Germany this year, down from a prior expectation of fall of 0.4%. It also reduced its growth forecast for the UK to 3.3% from 3.9%, its slowest rate of growth since 2011.

Expenditure on advertising in China, the world’s second-biggest spender after the United States, is also slowing.

However, small and medium-sized companies advertising for the first time on Facebook and Google are continuing to drive growth in the United States, where consumer spending chugs along at a steady pace.

“Small businesses in the US are spending heavily on social media and paid search, and are fuelling much of the global growth of these channels,” Zenith researchers said.

The firm said ad spending on social media was expected to grow 20% in 2019, overtaking print to become the third-largest advertising channel.