It looks like Brexit has finally bitten, as the UK suffers a sharp drop in adspend growth from 9.6% in 2016 to 0.9% in 2017, according to Zenith’s latest advertising forecasts.
The UK has been the stand-out growth market in Western Europe since 2011, growing at an average of 7.3% a year while the rest of the region grew by just 0.4% a year.
However, a slowing economy, gathering inflation, and political uncertainty over the mid-year elections and upcoming Brexit negotiations have all contributed to a hefty decline in UK adspend growth this year – which will in turn drag growth in Western European adspend down from 4.6% in 2016 to 2% in 2017.
Internet advertising continues to play a significant role and will account for more than 60% of all advertising expenditure in the UK (£11.1bn) next year, just three years after it passed the 50% mark, making the UK one of only three markets where internet advertising’s share exceeds 60% – the others being China and Sweden.
Global adspend growth is also down year-on-year – although marginally in comparison – and is expected to increase 4.2% in 2017 to US$559 billion compared with 4.8% in 2016.
However, 2016 was a ‘quadrennial year’, and benefited from extra adspend stimulated by the US elections, Summer Olympics in Rio and the football championships in Europe, making the annual comparisons tougher for 2017 for all markets.
These events added about US$6bn to the global total in 2016; after adjusting for this, underlying growth will actually strengthen from 3.6% in 2016 to 5.4% in 2017. This growth is coming from acceleration in Latin America and Central & Eastern Europe, and continued strong expansion in Asia Pacific.
“Global advertising budgets are rising steadily but cautiously, and are falling slightly behind overall economic growth,” said Vittorio Bonori, Zenith’s global brand president.
“After a decade of cost-cutting since the financial crisis, we believe brands now need to focus on top-line growth. Our survey shows that brands are looking to data and technology as the main driver of business growth, closely followed by business transformation and new competitive positioning.”
Phil Stelter, managing director of digital agency SYZYGY, said: “A forecast is just that, and we shouldn’t overreact. Yes, 2017 will be challenging, but that brings opportunities too. Instead of focusing on the drastic predicted fall in spend, the more interesting stat for me is that since 2012, internet ad spend will have more than doubled.
“If there is a bit of belt-tightening this year, it may even yield better, cleverer work and digital can lead the way. Surely this is a perfect time to focus on quality, transparency and effectiveness over the reflexive cost cutting that can stunt a great company’s growth for years to come.”
