Zenith Ad Spend Forecasts reveals mobile share of advertising market to exceed 30% in 2020

Nickie-Scriven (1).jpgMobile advertising will account for 30.5% of global advertising expenditure in 2020, up from 19.2% in 2017, according to Zenith's Advertising Expenditure Forecasts, published today. Expenditure on mobile advertising will total US$187bn in 2020, more than twice the US$88bn spent on desktop advertising, and just US$5bn behind the US$192bn spent on television advertising. At the current rate of growth mobile advertising will comfortably overtake television in 2021.
As internet users switch from desktop to mobile devices - and new users go straight to mobile - online advertising is making the same switch. Advertising on mobile devices is rising at a meteoric rate, and is taking market share from all most other media. Mobile ad spend grew 35% in 2017, and we expect it to grow at an average rate of 21% a year to 2020.
However, brands that are shifting budgets to mobile advertising may be affecting their ability to win new customers and expand their market share. Zenith's Touchpoints ROI Tracker research* shows that traditional mass media are more effective at driving recall among new or light buyers, therefore having a strong understanding of acquisition channels and retention channels is key.
According to Touchpoints ROI Tracker, television ads are most effective at driving recall among potential customers, while mobile ads are least effective. Potential customers are 53% as likely to recall television ads as existing customers, but for mobile ads this falls to 41%. Targeting mobile ads at existing customers can certainly help brands achieve short-term performance targets, especially because mobile is increasingly tying together the whole consumer journey. However, mobile is currently less effective at creating long-term awareness among potential customers than traditional media, so brands with a heavy mobile presence should consider investing more in traditional mass media to compensate for this.

Demand in China drives rapid cinema growth
Most of the traditional media are still growing despite the inexorable rise of mobile advertising, but generally at very low rates. We forecast television and radio to grow by 1% a year between 2017 and 2020, while out-of-home advertising grows by 3% a year. Cinema, however, is growing at 16% a year, thanks to investment in new screens, successful movie franchises, and better international marketing. The main driver, though, is surging demand in China, where ticket sales increased 22% in 2017. China overtook the US to become the world's biggest cinema advertising market in 2017, worth US$1.2bn, and by 2020 we expect it to reach US$2.8bn.
Print advertising continues to shrink together with circulations: between 2017 and 2020 we forecast newspaper ad spend to shrink by an average of 5% a year, while magazine ad spend shrinks by 6%. This refers only to advertising within print titles though - publishers' online revenues are counted within the desktop and mobile internet totals, so their overall performance is not as bad as the print figures suggest. Research organisations in some markets - such as the Advertising Association/WARC in the UK - provide combined print and digital ad revenue figures for publishers, generally showing that the digital revenues soften but do not reverse the decline in print.
Global ad spend growth remains steady
We forecast global advertising expenditure to grow 4.5% this year. That's fractionally behind the 4.6% growth we forecast in March, but that's primarily because we have upped our figures for 2017, providing a tougher comparison. We now estimate that global ad spend grew 4.2% in 2017, compared to our previous estimate of 4.0%. We forecast 4.2% growth for 2019 and 4.3% growth for 2020, so growth will remain comfortably within the 4%-5% range it has stayed within since 2011.
In Australia ad spend is expected to increase by 2.8% in 2018 off the back of a recently confirmed rise of 2.4% in 2017 (CEASA).
Says Nickie Scriven (pictured above), CEO, Zenith Australia: "All media with the exception of print is likely to be stable to up in 2018 with outdoor and the internet continuing to out-perform the market. We are seeing growth levels of the internet starting to slow, however, largely driven by search which saw mid-single digit growth in 2017 versus double digit growth in 2016.  January to May SMI data has the current market at 3.2% before late digital bookings.
"Sectors and events contributing the most to ad spend growth in the year to date include banks, Government and the Commonwealth Games.  In the wake of the Royal Commission into the banking and financial services industry, which has uncovered questionable corporate behaviour and corruption, our banks have ramped up their ad spend, with SMI reporting a 31% increase in spend year-on-year.  The Government has also boosted its ad spend by 28%."
Asia Pacific fuels global expansion
Asia Pacific is by far the biggest contributor to global ad spend growth. Between 2017 and 2020 it will contribute 43% of all the new ad dollars added to the market - US$32.1bn out of the US$75.1bn total. Six of the ten markets that will contribute the most to global growth are in Asia Pacific: China (which by itself will account for 22% of global growth), India (which will contribute 5%), Indonesia (4%), Japan (3%), the Philippines (3%) and South Korea (2%). We forecast that Asia Pacific will account for 33.8% of global ad spend in 2020, up from 32.6% in 2017.
North America, currently the largest advertising region, is falling behind in growth. We expect it to contribute 27% of new ad dollars between 2017 and 2020, while its share of global ad spend slips from 37.1% to 36.0%.
The 'Advanced Asia' region, which includes Australia, New Zealand, Hong Kong, Singapore and South Korea, is forecast to record 3.4% average annual growth to 2020, ahead of the 3.1% average growth rate since 2012.
Australia sits in 8th place in the Top 10 Ad Markets, with $11.95 billion in ad spend in 2017 and a forecast $13.118 billion by 2020.
Says Jonathan Barnard, head of forecasting and director of global intelligence, Zenith: "Dynamic markets in Asia Pacific are leading the way in global ad spend growth, growing at 5%-6% a year. By the middle of the next decade it will be the biggest advertising region in the world."
Says Vittorio Bonori, global brand president, Zenith: "The mobile device in our pockets is becoming the gateway to our media world, but its brand-building capabilities are still in question - simply applying old practices to new technology may not translate to brand growth. Having a clear understanding of how the entire ecosystem of paid, owned and earned media works together to drive return on investment is vital."

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