Despite trade disputes and fears of recession, the ad market has remained strong year-to-date, driving global ad growth.
Overall, Zenith is now forecasting that global ad spend will grow by 4.4% this year to reach $640 billion, down slightly from the 4.6% prediction made in June. Growth is expected to remain stable at 4.3% in 2020 and 4.4% in 2021.
The U.S. ad market is now the source of nearly half of global ad-spend growth, contributing 48% of new ad dollars this year and 46% between 2018 and 2021. The main sources of growth are digital brands and small businesses whose "ad budgets have been unlocked by the targeting and localization capabilities of online platforms," writes Zenith.
Europe's outlook, by contrast, is not as strong in growth.
Poor economic performance in key markets has eroded advertiser confidence. Zenith now forecasts 1.9% ad-spend growth in Western Europe this year -- down from its 2.4% forecast in June -- and 4.7% ad-spend growth in Central and Eastern Europe, down from 6.1%.
Ad-spend growth is also slowing in Asia-Pacific, with 4.4% growth forecast for 2019, after 6.9% growth in 2018. In this case, conditions have not deteriorated materially since the June forecasts.
Zenith’s expectations of growth for this year have held steady. The trade war with the U.S., however, has had a dampening effect on ad spend, particularly by international brands.
Although TV still rules as the supreme advertising channel globally (29%), it continues to suffer from shrinking ratings in key markets. TV will slip from $182 billion in 2019 to $180 billion in 2021, accounting for 27% of total ad spend in the latter year. Paid-search advertising — ranking at No. 2 — will exceed $100 billion for the first time this year, reaching $107 billion by the end of 2019.
Paid search is growing at 8% a year and will amount to $123 billion in 2021, when it will account for 18% of total ad spend.
Social media will grow 20% this year to reach $84 billion to place as the third-largest channel for advertising this year. Although social media receives a 13% share of global ad spend, its growth is slowing as it matures.
Zenith forecasts that social media will reach 17% of global advertising in 2020 and 13% in 2021, when it will account for 16% of all global ad spend. Print continues to dwindle. Advertisers’ combined expenditure on newspapers and magazines will fall 6% to $69 billion.
“Social-media advertising gives brands the opportunity to drive growth by using automated tools to optimize their campaigns for key business objectives,” said Matt James, global brand president, Zenith. “By using first-party data from their own websites to identify potential customers on social media, brands can convert consumers who are already on the path to purchase and target look-a-like audiences more effectively.”