Global ad spend shows healthy growth, but varies by market

ZenithOptimedia report shows strong growth in China

Global ad expenditure is set to grow at a healthy 5.4%, according to ZenithOptimedia’s June forecast for ad spending over the next two years.

A surprising change in rankings

“Perhaps the most surprising result for me [in this report] was the rapid change in the rankings of the top ad markets,” said Jonathan Barnard, head of forecasting at ZenithOptimedia’s head office in London. “We now expect China to overtake Japan and take second place this year; we previously thought this would take until 2016. We also think the U.K. will overtake Germany and take fourth place in 2016, an event we never previously predicted.”

Slow and steady

North America, the Middle East & North Africa and what ZenithOptimedia calls “Advanced Asia” (Australia, New Zealand, Japan, Hong Kong, Singapore and South Korea) are still growing steadily at 4% to 5% per year. Japan’s adspend growth also remains persistently slow at 2%.

US still big spender but younger markets catching up

Between 2013 and 2016 the US should contribute 26% of the US$90 billion that will be added to global adspend. China comes second, accounting for 17% of additional ad dollars over this period, followed by Indonesia and Argentina, accounting for 7% and 6% respectively.

Boom in Eastern Europe and parts of Asia

The biggest boom in spending? Eastern Europe/Central Asia, and “Fast-track Asia,” ZenithOptimedia’s category that includes China, India, Indonesia, Malaysia, Pakistan, Philippines, Taiwan, Thailand and Vietnam. These countries are on track to grow 8% to 12% a year.

Bust in Ukraine; bad news in Europe, Russia

The crisis in Ukraine has led to a predicted contraction of a severe 32% this year, while economic sanctions against Russia have weakened growth to 6.9%.

In the “Peripheral Eurozone” (Portugal, Ireland, Italy, Spain and Greece), where recession has caused advertisers to cut back or pull out of the region. Northern & Central Europe have stayed in an adspend holding pattern but “are recently seeing news signs of life,” the report states.

Media Breakdown

TV is still top dog for ad dollars, but internet ad spend is fastest-growing. TV ads pulled in 40% of spend in 2013, nearly twice that taken by desktop and mobile together (21%). And the Winter Olympics, the World Cup and the U.S. elections are expected to continue to fuel growth through 2016.

Television’s share of the global ad spend pie has grown for decades, from 29.9% of spend in 1980 to 39.6% in 2013. But ZenithOptimedia predicts it has now peaked, and will soon begin to decline.

The internet is currently, and perhaps unsurprisingly, the fastest-growing market with a forecasted average of 16% annual growth for 2014 to 2016. Mobile is now the main driver of global ad spend growth, and should contribute 38% of all the extra ad spend between 2013 and 2016. This is excluding markets where ZenithOptimedia doesn’t have a breakdown by medium—i.e. most of Africa. But with an estimated 8 out of 10 Africans now owning mobile phones, this continent is poised to become a player in mobile ad spend in the future.

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