Advertising expenditure for social media will increase by 20 percent to 84 billion US dollars this year, while the print segment will fall by 6 percent to 69 billion US dollars.
With a 13% share of global advertising expenditure, social media will be the third-largest advertising channel, behind television (29%) and paid search (17%). This growth will slow down over time. It is expected to reach 17% in 2020 and 13% in 2021, accounting for 16% of all global advertising expenditure.
"By advertising on social media channels, brands have the opportunity to increase their growth by using automated campaign optimization tools to achieve their goals," says Matt James, Global Brand President at Zenith. "By using first-party data from their own homepages, brands can recognize their potential consumers on social platforms and persuade users to research or shop online and target similar audiences."
The paid search segment will exceed USD 100 billion for the first time this year and reach USD 107 billion by the end of 2019. This segment is growing by 8 percent annually and will amount to USD 123 billion in 2021, accounting for 18 percent of total advertising expenditure.
Television advertising continues to suffer from declining ratings in key markets and will fall from USD 182 billion in 2019 to USD 180 billion in 2021.
USA drives spending growth, Europe and Asia on the decline
The US advertising market is currently the source of almost half of the global growth in advertising expenditure. It is expected that 48% of new advertising dollars will come from the US this year and that the share will be 46% between 2018 and 2021.
The main drivers of this growth are brands with a strong digital focus and small businesses whose advertising budgets are being channeled into the pinpoint targeting and geo-targeting capabilities of online platforms. Small businesses in the US are spending heavily on social media and paid search and are driving much of the global growth in these channels.
Their spending has been stable throughout 2019, driven by strong household consumption, and has not yet been undermined by concerns about a recession or escalating trade disputes with China. Expectations for the US advertising market have remained constant at 5.7% since the June edition of the Advertising Expenditure Forecasts was published.
In contrast, the forecasts for Europe were downgraded, as the weak economic performance in the key markets has weakened the confidence of advertisers. Germany and the UK recorded slight economic losses in the second quarter, while growth in Russia fell below 1 percent year-on-year. Growth of 1.9 percent is now forecast for Western Europe (2.4 percent in June) and 4.7 percent instead of 6.1 percent for Central and Eastern Europe.
In both European regions, expectations for 2019 are far below those of 2018, when advertising expenditure increased by 4.0% in Western Europe and 9.6% in Central and Eastern Europe. Part of this decline is due to the absence of sporting events such as the Winter Olympics and the FIFA World Cup. Another reason is the weakening economy.
Advertising spend growth is also slowing in the Asia-Pacific region, with a forecast of 4.4% for 2019, down from 6.9% in 2018. In this case, conditions have not deteriorated significantly since the June forecasts and growth expectations for this year are stable.
China, by far the largest market in the Asia-Pacific region, has been weakening for some time, while the size of the market has increased. The trade war with the US is having a dampening effect on advertising expenditure, particularly for international brands, which have had to be more cautious in terms of market communication and visibility. Spending in China is forecast to grow by 4.5% this year (2018: 7.8%), compared to an average annual growth rate of 8.7% between 2013 and 2018. Nevertheless, China will continue to be the second largest growth driver of global advertising spend in 2019, accounting for 14% of new advertising dollars.
Global growth in advertising expenditure expected to remain stable
Overall, global advertising spend is forecast to increase by 4.4% this year to USD 640 billion, a slight decrease from the June forecast of 4.6%. Growth is expected to remain stable at 4.3% in 2020 and 4.4% in 2021 (compared to the June forecast of 4.4% in 2020 and 4.3% in 2021).
Normally, an increase in advertising spend would be expected in 2020 - after a four-year period - which benefits from the US elections, the Summer Olympics and the UEFA Euro 2020 tournament. Given the current political and economic uncertainties, advertisers are currently cautious about additional spending.
"We have slightly downgraded our expectations for 2019 in a marginally weaker trading environment," said Jonathan Barnard, Head of Forecasting at Zenith. "However, growth should remain stable until 2021, underpinned by the stable US advertising market."