Zenith Downgrades Global, NA, Ad Growth Outlook
by Larissa Faw , June 19, 2017
Global advertising expenditure will grow only 4.2% to $559 billion in 2017, down from 4.8% growth in 2016, according to Zenith’s new Advertising Expenditure Forecasts.
Zenith’s current global growth forecast is a downgrade from March, when the Publicis Media agency predicted an increase of 4.4% for this year.
Zenith also slightly downgraded its North American outlook to 3.3% growth this year from the 3.4% gain it was expecting in March.
Zenith is the third agency to issue a revised and downgraded ad-spend forecast in recent weeks. Both Dentsu Aegis and Interpublic’s Magna Global issued revisions earlier this month. Slower-than-expected economic growth was cited for the downgrades.
Zenith reports that Asia-Pacific is leading global ad-spend growth, contributing 43% of the global growth between 2016 and 2019. In fact, Asia-Pacific will contribute nearly 50% more in new spending than the next growth-contributing region, North America, which will grow by $20 billion. Western Europe is projected to grow by $8 billion or 11%, while Central and Eastern Europe will grow by $4 billion (6%), and Latin America will grow by $3 billion (4%).
Asia’s growth contribution means this region will account for 33.4% of global ad spend by 2019, representing the first time it will account for more than a third of the global total.
“China may be slowing, but it’s still growing at $5 billion a year, while India, Indonesia and the Philippines grow at double-digit rates,” stated Jonathan Barnard, head of forecasting and director of global intelligence, Zenith.
Latin America is set to grow 4.1% this year — up from a 0.2% decline last year — and Central & Eastern Europe will jump 7.3%, up from 4.1% growth last year.
While some regions rise, others will fall. A slowing economy, inflation, and political uncertainty over the mid-year elections and upcoming Brexit negotiations have all contributed to a sharp drop in ad spend growth in the UK in 2017. Zenith now forecasts just 0.9% growth this year, down from 9.6% in 2016. UK is dragging down the entire Western European region from 4.6% in 2016 to 2.0% in 2017.
“Global advertising budgets are rising steadily but cautiously, and are falling slightly behind overall economic growth,” said Vittorio Bonori, Zenith’s global brand president. “After a decade of cost-cutting since the financial crisis, we believe brands now need to focus on top-line growth. Our survey shows that brands are looking to data and technology as the main driver of business growth, closely followed by business transformation and new competitive positioning.”
This article was originally published on MediaPost.com. Read more.