Global adspend growth to remain steady at 4.4% a year to 2021

Advertisers will spend more on social media platforms than on print for the first time this year, according to Zenith’s Advertising Expenditure Forecasts published early October. Advertising expenditure on social media will grow 20% this year to reach Us$84bn, while advertisers’ combined expenditure on newspapers and magazines will fall 6% to Us$69bn.

Social media will be the third-largest channel for advertising this year, with a 13% share of global adspend, behind television (29%) and paid search (17%). Its growth is slowing as it matures, and is forecast at 17% in 2020 and 13% in 2021, when it will account for 16% of all global adspend.

Meanwhile, paid search advertising will exceed Us$100bn for the first time this year, reaching Us$107bn by the end of 2019. Paid search is growing at 8% a year and will amount to Us$123bn in 2021, when it will account for 18% of total adspend. Television advertising continues to suffer from shrinking ratings in key markets, and will slip from Us$182bn in 2019 to Us$180bn in 2021, accounting for 27% of total adspend in the latter year.

The US drives global adspend growth as Europe and Asia slow

The US ad market is now the source of nearly half of global adspend growth. Zenith expects it to contribute 48% of new ad dollars this year, and 46% between 2018 and 2021. The main sources of this growth are digital brands and small businesses whose ad budgets have been unlocked by the targeting and localisation capabilities of online platforms. 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.

In both European regions, expectations for 2019 are well down on 2018, when adspend grew by 4.0% in Western Europe and 9.6% in Central & Eastern Europe. Some of this decline can be attributed to the absence of sporting events like the Winter Olympics and the FIFA World Cup, but the weakening economy has also eroded underlying growth.

Adspend growth is also slowing in Asia Pacific, with 4.4% growth forecast for 2019, after 6.9% growth in 2018. In this case, though, conditions have not deteriorated materially since the June forecasts, and Zenith’s expectations of growth for this year have held steady. China, Asia Pacific’s largest market by some margin, has been slowing down for some time as its scale has increased. China will nevertheless still be the second-biggest contributor to global ad growth in 2019, accounting for 14% of new ad dollars.

In September last year, Zenith thoroughly revised its historic estimates of ad expenditure in MENA, and added figures for Iraq, Jordan and Syria, as well as channels targeting Asian-language speakers across the region. The net effect of these changes is that its estimate of regional adspend is now higher than it was previously, but so too is its estimate of the shock the region has suffered from the drop in oil prices since 2014, political turmoil and conflict. It now estimates that adspend shrank by 47% between 2014 and 2018, and forecast 4.8% decline in 2019, before the market stabilises at 0.4% growth in 2020 and then grows by 1.0% in 2021, which would be MENA’S first substantial growth since 2014.

Global adspend growth steady at 4.3% to 4.4% a year

Overall, Zenith forecasts that global adspend will grow by 4.4% this year to reach Us$640bn, down slightly from the 4.6% forecast made in June. Growth is expected to remain stable at 4.3% in 2020 and 4.4% in 2021 (as compared to the June forecast of 4.4% growth in 2020 and 4.3% in 2021). Zenith would normally expect an increase in adspend in 2020, a ‘quadrennial’ year benefitting 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. This may change as the sports events approach, along with the opportunities they provide to reach valuable and engaged audiences.