Ad Outlook Downgraded Again, This Time It's Zenith

Zenith has downgraded its global ad-spending forecast for 2019, now predicting 4.6% growth to $639 billion. That’s down a bit from the 4.7% growth the Publicis Groupe media agency had forecast in March.

The revised forecast follows similar downgrades last month by both GroupM and Dentsu Aegis Network for spending growth this year. 

But Zenith stressed it believes its current forecast would be a “strong resultm” given that it would come on top of robust growth achieved last year, which the firm now says reached 6.4%. That’s an upgrade from the previous estimate of 5.9%.   

Growth is expected to taper slightly in the following two years, Zenith now predicts, including 4.4% for 2020 and 4.3% for 2021. 

In the U.S., growth this year is projected at 5.7% -- on top of 8.2% growth for 2018, which was infused with election and Olympics spending. 

Zenith says almost half of this year’s $28 billion in global growth will come from the U.S., which is benefiting from strong internet advertising growth, pegged at 15.4%, ahead of the global average of 11.7%.

China will be the next-biggest contributor to growth, adding $4 billion, followed by the UK and India, each contributing $1 billion. 

Although the internet ad market is slowing down worldwide as it matures, this category will account for 52% of global advertising expenditure in 2021, exceeding the 50% mark for the first time. 

This increase is fueled by the overlapping channels of online video and social media, which are expected to grow at average rates of 18% and 17% a year, respectively.

This spike will be aided by continued technological improvements to smartphone technology, connection speeds, and advertising targeting and delivery, combined with strong growth in investment in content. 5G technology will further improve brand experiences by having faster connections, per the latest Zenith forecast, issued today.

Much of the growth in internet ad spend comes from small, local businesses that focus on platforms like Google and Facebook. The fact that large numbers of small advertisers are spending all or most of their budgets online means they are skewing the overall picture, says Zenith. 

Overall, the agency says, spending consists of many small advertisers that spend all their budgets online, and large advertisers that devote considerably less than half their budgets to it.

"Brands still rely on traditional media to create broad mass awareness and reinforce brand values," says Matt James, global brand president, Zenith. 

Head of forecasting Jonathan Barnard add: "2021 will be the first year of single-digit internet ad spend growth since 2001, the year the dot-com bubble burst.”

The growth rate for paid search, which accounted for 37% of internet ad spend last year, is projected to slow from 11% to 7% by 2021. A lot of innovation in search is taking place in voice, which is currently not monetized, explains Zenith. 

Online classified advertising — ads sitting alongside other ads rather than content, such as jobs, property and second-hand vehicle listings — is also starting to lose out to other digital channels or free alternatives. It grew just 9% globally last year. By 2021, Zenith expects this spending to decline by 1.6%.

Print continues to drop from $164 billion in 2007 to $70 billion this year. Broadcast television is now beginning to shrink, though not nearly on the same scale. Zenith forecasts traditional television ad revenues will shrink from $184 billion in 2018 to $180 billion in 2021. 

Radio will increase its ad revenue by 1% annually. Out-of-home contractors continue to expand their digital display networks, contributing to 4% annual growth in their revenues. Cinema, which accounts for a tiny 0.8% of total ad spend, is growing at 12% a year, thanks mainly to a boom in the popularity of cinema in China.

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