Global advertising expenditure to grow by 4.1pc in 2018: Zenith

Leading forecaster Zenith lowered its prediction for global advertising expenditure growth in 2018 to 4.1 per cent to reach $578 billion by the end of the year, with marginal downgrades in North America, Western Europe and Asia Pacific.

Zenith, owned by France’s Publicis (PUBP.PA), had forecast a 2018 growth rate of 4.2 per cent in September. It had also estimated 4 per cent growth in 2017, down from 4.8 per cent in 2016.

“We expect advertising expenditure to grow more slowly than the global economy as a whole out to 2020,” Zenith said.

However, a boost of 4.1 per cent would still be welcome news for global advertising giants such as WPP (WPP.L), which cut its sales expectations for the third time this year in October, with weak client spending and technological disruption putting it on course for its lowest growth since the financial crisis.

This bleak outlook from the world’s largest advertising company followed similar forecasts from peers Publicis and Interpublic (IPG.N).

Zenith said that growth in North American advertising spending is being lifted by Canada’s buoyant economy and is outpacing growth in Western and Central Europe.

Advertising expenditure was forecast to grow by 3.4 per cent in North America in 2018, down from the 3.6 per cent growth it forecast for 2017.

Zenith also lowered its forecast for Western and Central Europe to 1.7 per cent this year from 3.9 per cent last year, hit by a slowdown in Britain.

Political and economic uncertainty over Brexit have contributed to a sharp slowdown in British advertising spending, which Zenith expects to grow by only 0.7 per cent this year, down from 9.6 per cent in 2016.

Zenith reiterated that the United States, the world’s largest economy, would be the leading contributor of $72 billion in advertising spending to the global market between 2017-2020, with China ranked second.

Separately, WPP's GroupM said it expects global advertising spending growth of 3.1 per cent this year and 4.3 per cent in 2018, helped in part by events such as the football World Cup.