Ad Spend Forecasts Q1 2018: An Upgrade in Global Confidence

Global ad spend sees solid growth in 2018

Zenith Optimedia’s latest ad spend forecasts released March show the biggest quarterly upgrade since 2011.Global ad expenditure is forecast to grow by 4.6% in 2018, that’s up from 4.1% forecast in December.
Cyclical events such as FIFA World Cup, Winter Olympics and the US mid-terms largely drive growth. The overall confidence in the ad industry is improving with several markets exceeding economic growth expectations, most notably China, the Philippines, Ireland and Argentina.

A Media Outlook: Digital Drivers

Overall, Zenith Optimedia highlights that advertisers continue to focus on innovation in communication strategies and invest in data and technology in efforts to transform their relationships with consumers. Moreover, in the case of media, some have already benefited from the transition to programmatic buying.

OOH: The 3^rd Largest Contributor Driven by DOOH

Out-of-Home (OOH) will remain as the third-largest contributor to global growth, increasing by USD 3 billion in 2017-2020 and accounting for 6.4% share to 2020.  The continued solid performance of Digital OOH (DOOH) is the main driver of growth of the medium.

Internet: Driven by Mobile

In 2017, Internet advertising surpassed TV becoming world’s biggest medium. Zenith Optimedia forecasts this channel to grow on average 10% per year 2017 - 2020, and account for 44.6% of global ad spend by 2020. Within Internet, Display, Online Video and Social Media are the fastest-growing ad formats while Mobile, as the most used device globally by far, is driving Internet ad spend growth overall.Ad spend in Mobile Internet will account for 29.3% of all media expenditure in 2020.

TV: declining but influential

Television is still a dominant brand awareness channel and while its share has been slowly declining since 2012, by 2020 it will still account for a considerable 31.2% share.

A Regional Outlook: Fast growth for Asia, Latin America and Eastern Europe

Overall, Zenith’s global forecasts show a growth of USD 77 billion between 2017-2020, with the US contributing 26%, China 22% and Rising Markets expected to contribute 57% of additional spend during the 3-year period.
On a regional level, MENA is the clear underperformer while Fast-track Asia, Eastern Europe and Central Asia are the outperformers.
The world’s top five advertising markets by size will remain stable between 2017 and 2020: USA (USD 19.7m), China (USD 16.9m), Indonesia (USD 3m), India (USD 2.95m) and UK (USD 2.8m)

The Americas

North America’s ad spend is expected to grow at 3.4% in 2018. Argentina and Brazil are now well out of recession and Zenith forecasts 4.4% growth in the Latin American region in 2018, and 5.1% average annual growth to 2020.

Europe

The Eurozone is slowly picking up growth. The advertising market has recovered positively since 2014.As the biggest European media player between 2011-2016, the UK drives change but the 'Brexit effect' is dampening the UK ad spend with only +0.8% growth in 2017.
However, despite uncertainty surrounding the UK, Zenith estimates the annual average growth in Western and Central Europe to 2020 of 3.2%.

MENA

Looking at Middle East and North Africa region, the fall in oil prices since 2014 has had a severe effect on these economies, consequently impacting  advertisers’ confidence in the region. However, Zenith expects MENA region to stop the ad spend decline by 2019 and start growing up to 2.8% in 2020.

Eastern Europe and Central Asia

Ad markets in Eastern European & Central Asia are forecast to continue a growing healthily with 8.8% annual rate by 2020 and remaining the fastest-growing region during this period.

Asia

Fast-track Asia, which includes China and India, has grown strongly over the past few years and Zenith expects growth to rise at an average of 7.4% per year to 2020. This is not as fast as Eastern Europe and Central Asia however, Fast-track Asia is ten times larger and contributes considerably more to the global ad spend growth.
Japan behaves differently to other markets in Asia. Despite economic stimulus, the country has been stuck at low growth rates in ad spend. Zenith forecasts average ad spend growth of 2.1% a year in 2017 - 2020.Overall, Zenith Optimedia Forecasts estimate Advanced Asia region to grow at 3.8% average annually to 2020.

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Notes:

• Fast-track Asia: China, India, Indonesia, Malaysia, Pakistan, Philippines, Taiwan, Thailand, Vietnam
• Advanced Asia: Australia, New Zealand, Hong Kong, Singapore and South Korea (Developed economies and advanced ad markets).