Zenith forecasts ad spend to rise by 3.3% in 2018 to $16.7b

• Personal and targeted communication is driving ad growth

Online video and paid search are driving the growth in global ad spend, as advertisers focus on personalised and targeted communications, according to Zenith’s latest advertising expenditure forecasts.

With advertisers now able to use these channels to target with pinpoint accuracy and serve personalised messages, they are increasing both the efficiency and effectiveness of campaigns.

Between 2018 and 2021, online video advertising will grow globally at an average of 18% a year, twice as fast as other forms of internet display advertising and well ahead of any other channel.

Paid search is not growing as quickly in percentage terms – it will grow at an average of 7% a year over this period – but in dollar terms will contribute even more to global growth than online video.

The application of AI techniques, better location targeting, integration with commerce and the rise of “in the moment” search are all making search more effective for advertisers.

Zenith forecasts that between 2018 and 2021, online video advertising will grow by US$20b, while paid search will grow by US$22b. Between them, those two channels will account for 60% of the extra ad dollars added to the market over this time.

By 2021 Zenith expects television and video to have a combined 48.8% share of global display – a higher share than television ever achieved on its own. Taken together, television and online video are working harder for advertisers than ever before.

E-commerce advertising – advertising that sits alongside and within search results and product listings on e-commerce sites – is well established in China, but is only just starting to get going globally.

Zenith believes it has the potential to transform the way brands convert customers online, and add about US$100b of new money into the global advertising market.

Zenith estimates global advertising expenditure will grow 4.5% by the end of this year, boosted by the Winter Olympics, FIFA World Cup and US mid-term elections. Growth will then remain steady and positive for the rest of the forecast period to 2021, at 4.0% in 2019, 4.2% in 2020 and 4.1% in 2021.

In Australia, Zenith anticipates ad spend will increase by 3.3% in 2018, to A$16.72b (US$12.34bn), a stable projection from the September forecast.

All media with the exception of print is likely to be stable to up in 2018 with out-of-home and internet out-performing versus the total media trend.      

Zenith Sydney head of investment, Elizabeth Baker (pictured), said: “Out-of-home’s success in 2018 is largely attributable to the increasing digitisation of the sector, with digital panels accounting for close to 50% of revenue. With the recent ACCC approval of both the JCDecaux/APN and oOh!media/Adshel mergers, this should continue to see the sector thrive. Operating cost efficiencies gained from the merger will undoubtedly unlock greater investment in technology, infrastructure and digitisation, and the greater depth of assets should result in better product offerings for advertisers. Of course, the increase in digitisation naturally increases revenue at site level as well.

“Driving online sector growth is the increase in ad spend across video and mobile. According to the latest IAB report released for FY2018, video expenditure has increased by 44.6% from FY2017, accounting for 42% of display.

“Radio is also performing well from ad spend perspective. Listener retention on the core broadcast platform – which accounts for 90% of total listening – means the medium remains efficient. This, coupled with new revenue opportunities across other audio channels such as podcasting, streaming, radio-branded social media and online, has been positive for the radio sector.

“TV remains stable, buoyed by events, finance sector investment following the Royal Commission into the banking and financial services industry as well as Government spending, although for the back quarter, increases in Government spend are likely to stabilise as Same Sex Marriage campaigning kicked off in October 2017. The Federal Election in 2019 will ensure that Government investment remains strong. The industry body, ThinkTV, which launched in 2016, has also helped stabilise the flow of money into digital with studies around ROI and effectiveness,” Baker said.

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