Global advertisers are set to boost adspend by 4.3% in 2020 as media prices increase 6.1% in reaction to consumers turning away from traditional commercial channels, according to Zenith.
The agency’s latest Advertising Expenditure Forecasts report predicts that commercial audiences supplied by media owners will decline by 1.6%, leading to the price hike in buying space.
Audience figures for traditional channels such as commercial TV are in decline, largely due to viewers defecting to the likes of Netflix and Amazon Prime Video, while the use of ad-blockers is hitting digital adspend.
According to Zenith, the UK is expected to outperform the overall global market, with the agency forecasting 4.9% adspend growth in 2020 – an improvement on 2019’s 3.2% increase. The upward trajectory is being powered by strong growth in digital adspend, which will be up 6.9% in 2020.
These trends are backed by Group M's This Year Next Year report, released last week, which forecast that TV ad revenue will fall 3.6% in 2019 and is unlikely to grow in the future on an underlying basis.
Group M also predicted that the UK is set to overtake Japan as the world’s third-largest ad market. Five years ago, the UK was tied with Germany as joint number four. However, since then it has grown 44%, while Germany has only grown 7%.
David Mulrenan, Zenith UK’s head of investment, noted that the UK’s growth would occur "despite the political and economic uncertainty", because it is embracing the digital transformation of marketing wholeheartedly. "In 2022, the share of UK adspend devoted to digital media will reach 71%, making the UK the first market in the world to exceed 70% digital adspend."
Globally, online video and social media will grow at the fastest rate between 2019 and 2022, by 16.6% and 13.8% a year on average respectively. Cinema will be in third, up 11.5%, thanks to growing demand in China, while TV will record zero growth in the next three years. As readership declines, newspapers and magazines will see adspend fall by 4.5% and 8.1% a year respectively.
Meanwhile, US president Donald Trump’s trade war with China will hit the global ad market, Zenith said, reducing growth by 1.1% next year. India is set to benefit, becoming the second-largest contributor of new ad dollars by the middle of 2020.
Zenith described the coming 12 months as a "quadrennial year", with the global ad market forecast to benefit from the Olympic Games, Uefa Euro 2020 and the US presidential elections. Collectively, these events are predicted to contribute $7.5bn to the global ad market.
"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," Jonathan Barnard, Zenith’s head of forecasting, said. "If the trade war is settled, we are more confident for 2021, forecasting 4.5% growth in global adspend despite the absence of the quadrennial events."
Zenith said that ad demand has grown consistently throughout the decade, by an average of 5.1% since 2010, as a result of both larger brands looking to sustain market share and build awareness, as well as smaller brands turning to advertising via cheaper digital platforms. Commercial audiences have fallen an average of 1.3% a year since 2010, while media inflation has increased by an average 6.5%.
Matt James, Zenith’s global brand president, said: "The days when we could find audiences all in one place are long gone. 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."
Later today, IPG Mediabrands’ Magna is set to release its own analysis of the global ad market, revealing similar trends and predictions.