Australian ad spend is projected to rise 2.6 per cent this year to $16 billion, according to research from Zenith. Global growth is projected to be 4.6 per cent in 2018. By 2020 Zenith expects online advertising to account for 44.6 per cent of global ad spend.

Amid growing industry speculation about cuts to digital advertising budgets, Zenith has found no evidence that advertisers as a whole are shifting budgets away from online advertising. According to the research, online advertising’s share of global advertising expenditure has continued to rise.

Zenith forecasts that advertisers will spend 40.2 per cent of their budgets on online advertising this year, up from 37.6 per cent in 2017, according to the Zenith Advertising Expenditure Forecasts report for 2018.

The rise in Australia ad spend can be attributed to the strong online classifieds sector and marginal growth in metro TV in the last quarter of 2017, according to Zenith.

Globally, advertisers continue to increase the share of their budgets allocated to paid digital channels. According to the March 2018 edition of Zenith’s Advertising Expenditure Forecasts, published today, online advertising grew by 13.7 per cent in 2017 to US$204bn. It accounted for 37.6 per cent of global advertising expenditure in 2017, up from 34.3 per cent in 2016.

This year Zenith expects online advertising’s market share to exceed 40 per cent globally for the first time, reaching 40.2 per cent. In 2017 online advertising already accounted for more than 55 per cent of ad spend in three markets (China, Sweden and the UK), so there is plenty of potential for further growth.

“We are observing sustained ROI from digital transformation,” said Vittorio Bonori, Zenith’s Global Brand President. “And we are now at the forefront of a transformation as brands shift budgets along the consumer journey, benefit from powerful algorithms and advanced machine learning techniques, and invest in new e-commerce solutions. This transformation is at the heart of driving brand growth.”

Biggest upgrade in global ad spend forecasts for seven years

In December Zenith forecast that global ad spend would rise by 4.1 per cent in 2018, towards the bottom of the 4-5 per cent annual growth range that the market has maintained since 2011. Zenith now expects the market to rise by 4.6 per cent this year, thanks in particular to improved economic growth in China and Argentina. A 0.5 percentage point revision to the forecasts is unusual; the last time Zenith revised them upwards by so much was back in March 2011.

“In Australia, our ad spend growth is slower and fuelled by strong online classifieds and some marginal growth in metro TV during the pre-Christmas retail period. In addition, digital and out-of-home continue to enjoy growth ahead of the market, however the rate of growth of digital out-of-home is  to starting to slow,” Zenith Australia CEO, Nickie Scriven, said.

“Among advertisers, automotive and retail continue to drive growth, while government and food/produce/dairy have had the largest declines in volume.”

China’s economy has surprised analysts with particularly strong growth in early 2018, with industrial production and infrastructure spending beating expectations. Investment in manufacturing has picked up, and business confidence has increased. Zenith now expects ad spend to grow 8 per cent this year, up from our 6 per cent forecast in December.

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