Global ad market lifts and strengthens despite Brexit concerns

Zenith upgraded its forecasts due to stronger than expected growth in the the US, the Philippines and Western Europe.

The global ad market has strengthened over the past few months, mainly due to the resilient US consumer, and any impact from the Brexit vote has been limited and confined to the UK, according to a new report.

Zenith said global advertising expenditure will grow 4.4 per cent this year to reach US$539 billion, ahead of the 4.1 per cent previously forecast in June, according to Zenith’s Advertising Expenditure Forecasts.

Zenith head of forecasting, Jonathan Barnard, said it expected the global ad market to strengthen further in 2017 and 2018. The agency upgraded its forecasts due to stronger than expected growth in the the US, the Philippines and Western Europe.

“This upgrade is mainly the result of stronger-than-expected growth in the US, where a strong labour market has encouraged consumers to increase their expenditure, and advertisers have fought harder for their share of the expanding market,” the report stated.

The US network TV is also expected to return to growth this year at 1 per cent, after shrinking 5 per cent last year, thanks to new spending by pharmaceutical and consumer packaged goods companies and a strong upfront. Zenith also predicted social media will accelerate from 32 per cent growth last year to 35 per cent growth this year, as advertisers take advantage of new formats, such as in-feed video, and the transition to mobile internet consumption continues.

Meanwhile, ad spend in the UK market will continue to grow despite concerns that Brexit could negatively impact the market.

“Although the vote for ‘Brexit’ in the UK’s EU referendum came as a shock to many in the market, so far advertisers have reacted calmly, with no widespread budget reductions,” the report stated.

Zenith has now forecast 5.4 per cent growth in ad spend this year, which is fractionally less than the 5.6 per cent forecast just before the vote.

“Most of the impact that Brexit will have on the UK ad market will come in the long term. The UK’s new terms of trade with the EU and other countries – whatever they turn out to be – are likely to restrict flows of trade and investment in comparison with the pre-Brexit status quo, leading to slower economic growth and slower growth in advertising expenditure,” the report said.

Zenith has also made slight upgrades to its ad spend forecasts for Asia-Pacific, with the region now expected to grow 6.3 per cent this year, up from our previous forecast of 6.2 per cent, thanks to heavy political spending in the Philippines in the run-up to the May 2016 elections.

Another finding is that mobile advertising is expected to take over from desktop even faster than expected. In June, Zenith forecast mobile advertising would overtake desktop in 2017. While that is still expect that to happen, the forecasts have been upgraded for mobile growth for this year from 46 per cent to 48 per cent, and next year, from 29 per cent to 33 per cent.

Zenith also said it expected mobile ad spend to exceed desktop by US$8bn in 2017, up from the US$2bn predicted in June. By 2018, the group said mobile should account for 60 per cent of all Internet advertising, up from our previous forecast of 58 per cent.

Additionally, desktop advertising is expected to take a hit, shrinking more than newspapers or magazines to 2018. Decline of desktop advertising is predicted to gain momentum over the next few years, with desktop ad spend falling by 0.8 per cent in 2016, 2.9 per cent in 2017 and 7.4 per cent in 2018.

Between 2015 and 2018, Zenith said desktop ad spend will shrink by US$10.7 billion, more than the other two declining media – newspapers, which will shrink by US$9.6 billion, and magazines, which will shrink by US$4.4 billion.

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+: google.com/+CmoAu


Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments

Blog Posts

Does your brand need a personality review?

There are five tell-tale signs your brand needs to take a long hard look at itself.

Charlie Rose

Senior Strategy Consultant, Principals

How to create profitable pricing

How do we price goods and services? As business leaders, we have asked ourselves this question since the history of trading.

Lee Naylor

Managing partner, The Leading Edge

Sport and sponsorship: The value of event sponsorship

Australia’s cricketers captured the nation’s attention during their recent run to the semi-final of the ICC Men’s World Cup. While the tournament ultimately ended in defeat, for over a month it provoked a sense of belonging, hope and empowerment for millions of people across Australia. Cricket, and sport in general, has a near-unique ability to empower individuals, irrelevant of their background, demographic or nationality.

Nikhil Arora

Vice-president and managing director, GoDaddy India

I didn't know about that. Thanks!

Jamison Herrmann

Twitter 'recap' helps you catch up with missed tweets

Read more

😂😂😂😂😂😂😂😂

Max Polding

What it takes to turnaround an iconic Australian brand

Read more

I spend a lot of time in my professional life as a provider of marketing solutions trying to persuade customers that CX, UX, UI and Custo...

sketharaman

Gartner VP: Why CMOs and CIOs must band together to make CX a discipline

Read more

I live the best deals at LA Police Gear.

Tyrus Rechs

6 Ways to ramp up Social Media to Your Web Design

Read more

Its absolute over priced acquisition. The CEO, must be fired for this all cash transaction. Absolutely no justification for prospective P...

about_face

Analysts question long-term play of SAP's acquisition of Qualtrics

Read more

Latest Podcast

More podcasts

Sign in