Personal and targeted communication drives the global advertising market

As advertisers are now able to target these channels and serve personalized messages, they increase both the efficiency and effectiveness of campaigns. Between 2018 and 2021, online video advertising will grow twice as fast as other forms of internet display advertising, at an average of 18% per year, and well ahead of any other channel.

Paid search is not growing as fast in percentage terms - an average of 7 percent per year over this period - but in dollar terms this discipline will contribute even more to global growth than online video. The application of AI technology, better location tracking, integration with commerce and the emergence of "in the moment" search are making search more effective for advertisers. Zenith predicts that between 2018 and 2021, online video advertising will grow by 20 billion US dollars and paid search by 22 billion US dollars. This means that these two channels will be responsible for 60 percent of global advertising market growth by 2021.

Online video and television are more important than ever for brand building

Advertisers often use online video alongside traditional TV, combining the high reach and immersive experience of TV with the ability of online video to target and optimize frequency. Taken together, these two media are becoming increasingly important for advertisers' brand-building campaigns. Their combined advertising market share in "display" media (i.e. in all media except paid search and classified ads) has risen from 46.2% in 2012 to 48.4% this year.

Accelerated growth in e-commerce advertising

E-commerce advertising - advertising that appears alongside and within search results and product listings on e-commerce websites - is well established in China, but is just starting to take off globally. Zenith believes that this form of advertising has great potential in online conversions and will bring about 100 billion dollars of additional investment into the global advertising market.

In China, the advertising market share of e-commerce advertising has increased from 0.8 percent in 2009 to an estimated 18.2 percent this year, driven by investments from companies such as Alibaba that use e-commerce as a source of advertising revenue. Until recently, e-commerce platforms outside of China have largely focused on direct-to-consumer sales. This has bypassed the advertising industry, but that is now changing. Amazon generated almost 5 billion US dollars in total advertising revenue in 2017, and in the third quarter of 2018, advertising revenue increased by 122 percent compared to the previous year. Other online platforms are following suit and investing in their own advertising opportunities.

New money for the advertising industry

Worldwide, e-commerce advertising is roughly on a par with China at the end of the last decade. Amazon had a 0.8 percent share of the global advertising market in 2017, the same share as Chinese e-commerce in 2009. If e-commerce follows a similar trajectory worldwide as in China, this category could account for 18 percent of the global advertising market by 2027. This corresponds to a volume of more than 100 billion US dollars. This is a huge revenue opportunity for online platforms and a completely new way for brands to reach customers at the point of purchase. This money usually comes from the brands' sales teams and not from the marketing budget. It is therefore new, additional money for the advertising industry, so it should expand the market without coming at the expense of advertising investment made elsewhere.

Continuous growth of the global advertising market continues

Zenith expects global advertising spend to increase by 4.5% by the end of this year, boosted by the Winter Olympics, the FIFA World Cup and the midterm elections in the US. Growth will then remain stable and positive for the rest of our forecast period until 2021, with 4.0% in 2019, 4.2% in 2020 and 4.1% in 2021. The advertising market in Switzerland is also growing steadily, but at a rather moderate pace compared to global dynamics. Zenith anticipates average annual advertising market growth of around 1.1% until 2021.

Central and Eastern Europe will be the fastest growing region, with average growth of 6.3% per year between 2018 and 2021, driven by the continued strength of Russia, which is growing at 6.8% per year and accounts for 39% of total regional sales. The Asia-Pacific region follows in second place with average growth of 4.9% per year, or 5.7% per year excluding Japan. India is the standout market here, growing at 13.5% per year - from USD 9.7 billion in 2018 to USD 14.2 billion in 2021. This makes the country the eighth largest advertising market in the world. India has enormous potential for further growth, as the advertising industry accounts for just 0.3 percent of GDP, less than half the Asia-Pacific average of 0.7 percent.

100 billion dollars in new investments in prospect

Emerging advertising markets such as India are playing an increasingly important role in the global growth of advertising investments. However, the "established" markets - which include North America, Western Europe and Japan - still account for 62% of the global advertising market this year, compared to 75% ten years ago.

"E-commerce advertising is poised to transform the advertising market in the same way that paid search has over the last decade," said Jonathan Barnard, Zenith's Head of Forecasting and Director of Global Intelligence. "This could bring 100 billion dollars of new investment into the market over the next ten years."

"Brands are transforming their business to take advantage of new digital opportunities," said Vittorio Bonori, Global Brand President of Zenith. "Better segmentation and targeting, personalized creative and direct transactional relationships with consumers are combining to drive brand growth."