The Eurozone's week economy has affected the Asia-Pacific region, leading ZenithOptimedia to downgrade its ad spend forecast for the region slightly, from 6.7 per cent in June to 6.2 per cent.
In dollar terms, Asia-Pacific spending is now expected to reach a total of US$140.4 billion.
Weakened exports to developed markets underpin the downgrade, according to the report. However, the media group expects Asia-Pacific to expand at a consistent annual rate of 6 per cent in 2013 and 2014, or 8 or 9 per cent excluding Japan.
This slight decline is expected, and media experts told Campaign Asia-Pacific in August that it is not expected to greatly affect marketing budgets.
Globally, ZenithOptimedia has likewise reduced its forecast for growth in 2012 to 3.8 per cent from the 4.3 per cent it published in June. This is largely due to advertisers reducing spending in the Eurozone in response to further economic weakness. The media group expects Eurozone spend to shrink 3.1 per cent over the course of this year, compared to the 1.1 per cent decline forecast in June.
Next year, Zenith expects global ad expenditure to grow 4.6 per cent, reaching US$525 billion. The growth will be led by developing markets, with central and eastern Europe 'bouncing back' after a tough 2012 with 7.4 per cent growth. The report also forecasts 10.1 per cent growth in Latin America.
North America has had a particularly strong 2012, thanks to record Olympic audiences and heavier than expected political advertising in the US. The region's ad spend is expected to grow 4.2 per cent to US$172 billion. Despite the tough comparison, Zenith still expects a solid 3.6 per cent growth from North America in 2013.
Ad markets in the Middle East and North Africa are still constrained by the region’s social and political turmoil, according to Zenith. This has left many advertisers cautious about attracting negative attention. As a result the media group forecasts just 1 per cent growth in ad expenditure for the region this year, followed by 2.8 per cent in 2013 and 2.3 per cent in 2014.
"Advertisers are broadly continuing to invest, despite the global economic concerns and issues,” said Steve King, global chief executive officer for ZenithOptimedia Group. “However, they are seeking to ensure that any expenditures are delivering strong return on investment. The US continues to deliver solid growth. This, combined with the growth in developing markets and in digital media, has helped mitigate the drop in Eurozone spending.”
Despite the rapid growth of developing markets, the US remains the biggest contributor of new ad dollars to the global market. Between 2011 and 2014, Zenith expects the US to contribute 29 per cent of the US$69 billion that will be added to global ad spend. The BRIC countries will contribute a further 36 per cent and overall, the report expects developing markets to account for 59 per cent of all spending growth over this period.
Zenith also predicts that Brazil will overtake the UK to become the world's fifth largest ad market in 2013, and in 2014 Russia will overtake Canada as the ninth largest. China is already the third largest and is steadily approaching Japan.
By medium, digital advertising, particularly internet advertising, is supplying most of the growth in ad spend and will continue to do so. This year, Zenith expects global internet advertising to grow by 15 per cent to total US$88.4 billion. This growth will be sustained throughout 2013, while traditional media, by contrast, will only grow 2.3 per cent.
Within internet advertising, display is the fastest-growing sub-category, with 20 per cent annual growth, thanks to the rapid rise of social media and online video advertising, said the report. This year, it is expected to total US$32.8 billion.
Display advertising is now growing substantially faster than paid search (which the agency forecast will grow by 14 per cent a year to 2014) and classified (6 per cent a year). Display advertising accounted for 36 per cent of internet advertising in 2011; by 2014 Zenith expects this proportion to increase to 40 per cent.
Internet advertising will increase its share of the ad market from 16 per cent in 2011 to 21.4 per cent in 2014. It already accounts for more than 25 per cent of ad expenditure in five markets (South Korea, the UK, Denmark, Norway and Sweden) and by 2014, it is expected to account for more than 30 per cent in Australia and Canada as well.
In the most advanced market—the UK—internet advertising attracted 33 per cent of expenditures in 2011, and Zenith forecasts it to attract 40 per cent in 2014.
The internet is also the biggest contributor of new ad dollars to the global market. Between 2011 and 2014 the media group expects internet advertising to account for 60 per cent of the growth in total expenditure.
The next biggest is television, which is forecast to contribute 41 per cent of growth. (The two add up to more than 100 per cent because newspapers and magazines are subtracting from total growth.) Television’s share of the global ad market has risen steadily over the last few years: it reached
40.2 per cent in 2011, up from 36.9 per cent in 2005.
The internet has risen principally at the expense of print, according to Zenith. Between 2001 and 2011 the internet’s share of global advertising rose by 14 percentage points, while newspapers’ share fell 12 points and magazines’ share fell by five points. The group expects newspaper and magazine advertising to continue to shrink by an average of 2 per cent a year until 2014.
Because this figure does not include advertising on websites, tablet editions or mobile apps, the prospects for newspaper and magazine publishers are therefore not quite as bleak as the headline figures would make them appear, noted the report.