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.”