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Global adspend will grow 4.2 per cent to $559 billion (€499.7bn) in 2017, according to Zenith’s new Advertising Expenditure Forecasts. That’s down from 4.8 per cent growth in 2016. However, 2016 was a ‘quadrennial year’, and benefited from extra adspend stimulated by the US elections, Summer Olympics in Rio and the football championships in Europe, making the annual comparisons tougher for 2017. These events added about $6 billion to the global total in 2016; after adjusting for this, underlying growth will actually strengthen from 3.6 per cent in 2016 to 5.4 per cent in 2017. This growth is coming from acceleration in Latin America and Central & Eastern Europe, and continued strong expansion in Asia Pacific.
Recovery in Latin America and Central & Eastern Europe
Conditions in Latin America are improving: Brazil has emerged from its longest recession since the 1930s, while Argentina is finally tackling inflation as its economy starts to recover too. Central & Eastern Europe is gathering speed after conflict and sanctions hit Russia and connected markets in 2015. We forecast 4.1 per cent growth in adspend in Latin America this year, up from a 0.2 per cent decline last year, and 7.3 per cent growth in Central & Eastern Europe, up from 4.1 per cent growth last year.
Asia Pacific is leading global adspend growth
Advertising expenditure in Asia Pacific will grow by $30 billion between 2016 and 2019, contributing 43 per cent of the global growth in adspend over this period, Asia Pacific will contribute nearly 50 per cent more ad dollars than the next region, North America, which will grow by $20 billion (29 per cent of global growth). Western Europe will grow by $8 billion (11 per cent), Central & Eastern Europe will grow by $4 billion (6 per cent), and Latin America will grow by $3 billion (4 per cent).
By 2019 Asia Pacific will account for 33.4 per cent of global adspend, up from 32.1 per cent in 2016. This will be the first time it will account for more than a third of the global total. The Asia Pacific ad market will still be smaller than the ad market in North America, which will account for 36.3 per cent of global adspend in 2019, but the gap between the two is narrowing. In 2013 the North American ad market was $35 billion larger than Asia Pacific’s, but by 2016 the difference had dropped to $27 billion, and we expect it to fall to $18 billion in 2019.
Weak growth in the UK drags down Western Europe
The UK was the stand-out growth market in Western Europe from 2011 to 2016, growing at an average of 7.3 per cent a year while the rest of the region grew by just 0.4 per cent a year. However, a slowing economy, gathering inflation, and political uncertainty over the mid-year elections and upcoming Brexit negotiations have all contributed to a sharp drop in adspend growth in the UK in 2017. We now forecast just 0.9 per cent growth in UK adspend this year, compared to 2.4 per cent growth for the rest of Western Europe, and down from 9.6 per cent growth in UK adspend in 2016. This drop in UK growth, together with the quadrennial comparison, will drag growth in Western European adspend down from 4.6 per cent in 2016 to 2 per cent in 2017.