Global ad expenditure is set to increase 4.4% in 2016 to $539bn, topping previous forecasts of 4.1% in June. That’s according to ZenithOptimedia‘s latest Advertising Expenditure Forecast which finds that ad expenditure will likely increase by another 0.1% in 2017 and grow to 4.6% in 2018.
The increase in expenditure is likely due to stronger spending following an increase in consumer purchases. Social media is expected to grow to 35% this year, up from 32% in 2015 with advertisers turning to new formats such as in-feed video and mobile internet formats.
Despite the Brexit vote in the UK, marketers have reacted calmly with few budget reductions. Zenith predicts a growth of 5.4% in ad spending tin 2016. However, the report did warn that Brexit results were expected long term and new trade deals between the UK and Europe would likely restrict investment compared to pre-Brexit statuses.
Jonathan Barnard, Head of Forecasting at Zenith, says:
“The global ad market has strengthened over the past few months, thanks mainly to the resilient US consumer. So far any impact from the vote for Brexit has been limited, and confined to the UK. We expect the global ad market to strengthen further in 2017 and 2018.”
Companies are also expected to invest less as uncertainty over the voting results hits the country. Likewise, consumers may make fewer big purchasing decisions.
Mobile advertising continues its growth trajectory and will overtake desktop by next year. Results for 2016 were upgraded from 46% to 48% and 29% to 33% in 2017 with overall ad expenditure exceeding desktop by $8bn next year. Mobile is expected to account for 60% of all online advertising in 2018, up from 58%.
Mobile internet set to grow
“We have seen more excitement around the use of mobile advertising which goes in line with Zenith’s forecast of mobile spend growing astronomically in the next three years. The forecast of 48 percent growth this year and 33 percent next year shows that advertisers are finally embracing the always-on mobile consumer. However, advertisers need to up their game when it comes to utilising this medium – chasing clicks isn’t the way forward. Advertisers will keep investing in the channel and reap the benefits if they make sure that the user experience isn’t disrupted and if they accept that it is a useful branding channel like more traditional mediums, such as TV.”
Meanwhile, desktop advertising is expected to decline by 0.8% this year and 2.9% in 2017. By 2018, Zenith expects a drop of 7.4%.