Zenith predicts local ad spend will grow 2.1% this year, and 1.1% in 2020
According to Zenith’s advertising expenditure forecasts, local ad spend will grow 2.1% this year, and 1.1% in 2020.
The agency’s Sydney head of investment, Elizabeth Baker, said the market will continue to grow, but that growth will sit between 1% and 2% until 2022.
Zenith’s Elizabeth Baker
“Assuming that the economy stabilises both locally and globally, we do anticipate a stronger market from 2022, with the current estimate sitting at 2.7%,” Baker said.
“Although we’re expecting a slow down, digital advertising in all its forms will continue to grow at a healthy rate. This reflects both the continuing migration of audiences to online platforms and the transformational impact of 5G.”
Internet ad spend is set to grow by 7% this year according to the report, driven by online video. This growth will slow to 4% in 2020 and 2021 due to continuing economic uncertainty, but is forecasted to experience another spurt of 6% growth in 2022 as the economy stabilises and 5G becomes more integrated.
Globally, ad spend should be up by 4.3% next year, but commercial audiences will drop by 1.6%, fuelling a 6.1% increase in media prices.
Zenith said demand for advertising has steadily grown throughout the decade, and in order to maintain market share, brands need to also maintain brand awareness, requiring regular brand-building campaigns with mass reach. On average, ad spend has grown by 5.1% since 2010.
Despite this growth, mass audiences are shrinking and fragmenting thanks to ad blockers and streaming services, respectively. The supply of commercial audiences has shrunk by 1.3% per year on average since 2010, according to Zenith’s research, while media inflation has averaged 6.5% a year.
“The days when we could find audiences all in one place are long gone,” Matt James, Zenith’s global brand president, said.
“Now, however, technology empowers us to find them wherever they are, online or offline, and win back value for our clients through efficiency and effectiveness – by ensuring that we target and reach consumers with the right message at the right point in the consumer journey.”
Online and social media will remain the fastest-growing channels over the next three years, up an average of 16.6% and 13.8%, respectively, per year.
Cinema will have 11.5% annual growth, driven by China’s surging demand, but still only account for 0.9% of global ad spend in 2022.
TV will not experience growth over the next three years, the report said. Newspaper spend will drop 4.5% each year to 2022, and magazines 8.1%.
Next year is a ‘quadrennial’, bringing with it the Tokyo Olympics, UEFA Euro and the US Presidential election. These events are expected to add US$7.5bn into the global ad market. Normally, this would result in comfortable growth, but the forecasted 4.3% is just above this year’s estimate of 4.2%. According to Zenith, the US-China trade dispute is partly to blame for increased uncertainty and reduced investment, costing the global ad market 1.1 percentage points of growth next year. Without this impact, the market would be set to grow by 5.4%.
“As geopolitical tensions wipe out most of the expected gains from sport and elections, 2020 will be a disappointing quadrennial year for the ad market,” said Jonathan Barnard, Zenith’s head of forecasting.
“If the trade war is settled, we are more confident for 2021, forecasting 4.5% growth in global ad spend despite the absence of the quadrennial events.”
Despite the dispute, the US and China still lead global ad spend growth, and are forecast to be up by US$39.1bn and US$10.3bn respectively between 2019 and 2022. The two countries will account for 56% of all ad spend growth over the next three years.
India ranks third, set to grow by US$4.3bn between 2019 and 2022. Growth is expected to be 12.4% next year, 12.9% in 2021 and 12.6% in 2022. Zenith predicts that, by the mid-2020s, India will overtake China as APAC’s main source of growth, and the second biggest ad market in the world.
