Zenith 2017

Global ad expenditures are forecast to grow 4.5% in 2018, reaching $581 billion by year-end; while growth in both 2019 and 2020 will top out at 4.2%, according to the updated Zenith Advertising Expenditure Forecasts, released Monday. Overall, its numbers have remained steadily within the +4% to +5% range since 2011.

The new forecast follows Zenith’s June predictor, in which the 4.5% forecast for 2018 was the same—although the research firm notes that shifts have occurred in some markets. Canada and the UK have strengthened since the previous quarter, while the Middle East and North Africa (MENA) have weakened. Western Europe is the most improved region. In dollar terms, the new forecast is $1 billion higher than June, mainly because of Middle East and North Africa estimate increases.

By bloc, North America’s ad market has been “growing fairly steadily but unspectacularly since 2010,” Zenith says. The pace of change is set by the U.S., where advertisers spend 23 times more than they do in Canada. “Adspend continues to grow in the US, despite uncertainties over macroeconomic policy and trade.” Its forecast for North America is +3.3% in 2018, with an average of the same growth rate each year to 2020.

In fact, the U.S. will be the leading contributor of new ad dollars to the global market over the next three years, “making up in scale what it lacks in speed,” Zenith reports. China is second, combining large scale and rapid growth. Between 2017 and 2020, global advertising expenditure will increase by $75 billion in total, of which the U.S. will contribute 26% and China 22%.

Zenith also digs into the primary drivers of sales growth. Two thirds of all the growth in global advertising expenditure between 2017 and 2020 will come from paid search and social media ads, the September Zenith’s Advertising Expenditure Forecasts report offers. Over this period, total spending will increase from $86 billion to $109 billion on paid search; and from $48 billion to $76 billion on social media. Paid search will grow by $22 billion over this period, while social media will grow by $28 billion, making it the single biggest contributor to growth.

“Paid search has undergone constant development in recent years. Search platforms, agencies and brands are applying ever more sophisticated artificial intelligence techniques to improve targeting, messaging and conversion,” Zenith points out. “Search is becoming more integrated with commerce, both online – as brands shift budgets to e-commerce platforms – and offline, as retailers use location and store inventory data to match active shoppers directly with the products they’re searching for.”

The next step in the evolution of search is voice search, but so far there has been little direct advertising through voice assistants, the reports says.