The global ad market is on course for 4.6 percent growth this year, up from 3.9 percent growth last year, according to ZenithOptimedia’s new Advertising Expenditure Forecasts report. Global advertising expenditure will total $579 billion in 2016, and will exceed $600 billion in 2017, reaching $603 billion by the end of the year.
The global economy faces clear challenges, such as the ongoing slowdown in China, and recession in Brazil and Russia; the humanitarian disaster originating in Syria; and uncertainty over the future of the European Union, notably continuing fragility in Greece and the possible departure of the UK. But advertisers’ confidence has remained largely unshaken, and the forecasts for global growth in 2016 have barely changed since ZenithOptimedia published its last forecasts in December. There are three main reasons behind the optimism of the prospects for global adspend growth: special events this year, rapid recovery from the markets most affected by the Eurozone crisis, and the emergence of rapidly growing markets that are now opening up to international advertising.
Quadrennial to lift ad growth by $6.1 billion
In the short term, 2016 is a quadrennial year, when ad expenditure is boosted by the US presidential elections, the Summer Olympics and the UEFA football championship in Europe. These events are expected to add a net $6.1 billion to the global ad market in 2016 – 3.2 billion from the elections, $2.0 billion from the Olympics and $0.9 billion from the football game. The quadrennial will, therefore, add 1.1 percentage points to this year’s growth rate for global advertising expenditure, which would otherwise be 3.5 percent.
Crisis-hit European markets now enjoying rapid recovery
In the medium term, most of the European ad markets that suffered the deepest cuts from the financial crisis and its aftermath are now enjoying sustained recovery and will expand rapidly over the next few years. Adspend in Ireland, Portugal and Spain fell by a total 45 percent between 2007 and 2013. However, adspend in these markets recovered by 8.9 percent in 2014, and 7.3 percent in 2015, and ZenithOptimedia forecasts an average growth of 6.7 percent a year to 2018. Other European markets that fell sharply during the crisis but are now growing at a rapid pace include Croatia (forecast to grow by 6.1 percent a year to 2018), Denmark (7.3 percent), Hungary (5.2 percent) and Romania (6.3 percent). Even Greece is expected to enjoy annual growth of 3.9 percent. These markets have room to growth rapidly for several years to come: after all, they have a lot of ground to make up.
ZenithOptimedia identifies Thirty Rising Media Markets with long-term potential for rapid growth
In the longer term, many smaller advertising markets are now opening up to international advertising, and have the potential to growth at double-digit rates for many years to come. ZenithOptimedia also published a new report, called the Thirty Rising Media Markets, which looks at a selection of 30 up-and-coming markets for the first time. The regular Advertising Expenditure Forecasts report surveys 81 key advertising markets across the world. For the Thirty Rising Media Markets, the company decided to look a bit further and identify advertising markets that are developing quickly and are starting to rival the scale of some of the established 81 markets. It estimates that advertising expenditure across these 30 markets totalled $7.7 billion in 2015.
These 30 markets vary widely in nature: in size of population, openness to international business, diversity of economic activities, productivity, and geographically – 16 of the markets are in Africa, seven in Asia, six in Latin America and one in the Middle East. What they share is that their economies are growing rapidly in the long run, and that their advertising markets are growing even faster. The advertising expenditure in these 30 markets is forecasted to grow at an average rate of 15 percent a year between 2015 and 2018 – more than three times faster than the global average – and to increase by $3.9 billion – a sum equal to the current size of Sweden’s ad market – to $11.6 billion. Advertising accounted for 0.37 percent of the GDP across these 30 markets in 2015, well below the global average of 0.70 percent, highlighting their long-term growth potential.
Internet will now overtake television next year
As usual, Internet advertising is the main driver of global adspend growth. The report expects Internet advertising as a whole to grow at more than three times the global average rate this year – by 15.7 percent, driven by social media (31.9 percent), online video (22.4 percent) and paid search (15.7 percent). Internet advertising’s growth rate is slowing as it matures – it was 21.1 percent in 2014 – but is expected to remain in double digits for the rest of the forecast period. This sustained growth, combined with downgrades to television in Brazil in China, has led to the forecast of Internet advertising overtaking television advertising globally in 2017 – a year earlier than ZenithOptimedia’s forecast back in December.
Mobile to contribute 92 percent of adspend growth
The great majority of new Internet advertising is targeted at mobile devices, thanks to their widespread adoption and their ever-tighter integration into consumers’ daily lives. According to the forecast, mobile advertising expenditure will increase by $64 billion between 2015 and 2018, growing by 128 percent and accounting for 92 percent of new advertising dollars added to the global market over these years – not including those markets where there is no breakdown of advertising expenditure by medium.
“Rapid growth from countries that are relatively new to the international advertising market, combined with a resurgence of established markets that were damaged by the financial crisis, will keep the global ad market on track for healthy growth for at least the next few years,” says Jonathan Barnard, head of forecasting at ZenithOptimedia, in a press statement.
*The 30 countries included in the Thirty Rising Media Markets are: Algeria, Angola, Bangladesh, Bolivia, Cambodia, Cameroon, Côte d’Ivoire, Dominican Republic, Ethiopia, Gabon, Ghana, Guatemala, Iran, Jamaica, Kenya, Laos, Mongolia, Morocco, Mozambique, Myanmar, Namibia, Paraguay, Senegal, Sri Lanka, Tajikistan, Tanzania, Trinidad & Tobago, Tunisia, Uganda and Zambia.