Companies invest more in digital advertising

In fact, the online share of global advertising investment continues to grow rapidly. Zenith forecasts that advertisers will spend 40.2 percent of their budgets on online advertising this year. Last year, the figure was 37.6 percent.

This increase reflects the digital transformation. Advertisers are investing in technology, data and innovation to improve their relationships with consumers.

"In this country, too, digital advertising channels are and will remain the growth drivers of the advertising industry," comments Beat Krebs, CEO of Zenith in Switzerland. "We expect digital advertising spend to grow by almost 13 percent in 2018 - the overall market will grow by 1.4 percent, primarily as a result of this," explains Krebs.

In recent months, there has been a recurring theme of concern in the global advertising industry about the effectiveness of some digital media investments and the safety of the digital environment. However, a number of Zenith's global research projects clearly demonstrate the impact of brand experience and growth combined with the progressive use of digital technologies throughout the consumer journey.

Advertisers worldwide are increasing their budget shares for paid digital channels. According to Zenith's edition published on Monday. Advertising Expenditure Forecasts of March 2018, online advertising grew 13.7 percent in 2017 to $204 billion. It accounted for 37.6 percent of global advertising spend last year, up from 34.3 percent in 2016. This year, we expect online advertising's global market share to exceed 40 percent for the first time, reaching 40.2 percent. In three markets (China, Sweden and the United Kingdom), the share of online advertising already exceeded 55 percent in 2017. By 2020, we expect it to account for 44.6 percent of global advertising. In Switzerland, on the other hand, there is still great digital growth potential: Zenith expects a digital advertising market share of just under 20 percent in this country by 2020.

Of course, the rise of online advertising tells only part of the story of digital transformation. If the rise of online advertising investment has been rapid, the proliferation of new advertising technologies has been even faster. Zenith tracked the revenues of 14 publicly traded ad tech companies between 2010 and 2016 and found that their revenues grew five times faster than online revenues during that time. Companies have also invested heavily in innovation. Since 2010, companies in OECD countries have increased their investment in research and development three times faster than their advertising spend.

Largest upward revision in global adspend forecasts in seven years

Confidence in the global ad market is currently improving rapidly. In December, we forecast a 4.1 percent increase in global adspend for 2018, bottoming out the annual growth range of between 4 and 5 percent that has existed since 2011. This year, we expect the market to grow by 4.6 percent, thanks in particular to economic growth in China and Argentina. Revising our forecasts by 0.5 percentage points is unusual. The last time we revised upward by this much was in March 2011.

China's economy surprised analysts with particularly strong growth in early 2018, with industrial production and infrastructure spending exceeding expectations. Investment in manufacturing has increased, and business confidence has risen. We now expect growth of 8 percent this year, up from our forecast of 6 percent in December. It is worth noting that the TV medium in China has successfully fought off strong competition from online video and is no longer losing advertising spend, as was the case in 2014, 2015 and 2017. In China, we expect TV advertising to grow by one percent and online advertising by 13 percent this year.

Argentina recovered faster than expected from its recession in 2016. GDP grew by 2.8 percent in 2017, exceeding the IMF's forecast of 2.5 percent, driven by construction, agriculture and foreign investment

has been. We now expect advertising spending in Argentina to increase by 1 percent this year, after previously forecasting a decline of 2 percent, as consumer spending picks up again.

Our global forecasts for 2019 and 2020 are also above the forecasts we issued three months ago, although not by as much. We forecast growth of 4.4 percent for 2019 and 4.3 percent for 2020, both by 0.2 percentage points.

"The global ad market grew 4 percent last year," said Jonathan Barnard, head of forecasting and director of global intelligence at Zenith. "After a jump in confidence, we now expect much faster growth this year, supported by the Winter Olympics, the World Cup and the midterm elections in the U.S."

About the study

Zenith's study combined six independent brand growth studies - Millward Brown Brandz, Seigel & Gale Brand Simplicity Index, Interbrand Top 100, NetBase Brand Love study, Brand Finance Top 500 and the European Brand Institute's Top 100 - into a single growth index. It then analyzed how this new ranking correlates with financial performance, media activity, digital activity, and owned and earned content performance.