The global market is growing thanks to the recovery in Latin America and Central and Eastern Europe, as well as the high growth dynamics of Asia-Pacific markets

According to the latest forecast by media agency Zenith, the Polish advertising market will grow by 2.2% this year, and the total value of advertising investment will reach PLN 7.061 billion net by the end of the year.

Advertisers in the media and entertainment sector most confident about business growth

Advertising investment is growing at a slow but steady pace. The growth of the advertising market is supported by a growing economy – the first quarter positively surprised with its results, the expected rebound in investment has occurred, private consumption is rising, and the labor market is flourishing. The situation looks similar on the global market – advertising spending is growing steadily, at a pace below global GDP dynamics. Advertisers are cautious, but as shown by the results of a survey conducted by Zenith among key clients from around the world, including Poland, some industries are looking to the future with confidence, expecting growth in their business, which also gives us reasons for optimistic forecasts – said Justyna Mazur, Managing Partner at Zenith.

Forecast of advertising expenditure dynamics on the Polish market

According to Zenith analysts, television advertising expenditure will grow by 0.6% this year, i.e., at a rate 1 percentage point lower than last year. The slowdown in this segment of the advertising market is the result of reduced investment by the largest advertisers.

The online advertising segment is growing at a steady pace. This year, internet advertising expenditure will grow by 11.8%, mainly due to investment in online video and programmatic, as well as the growth of the e-commerce sector, which has increasingly higher advertising budgets. A threat to the continued stable growth of online advertising is the widespread use of ad blockers, which consequently leads to, among other things, a reduction in advertising space and an increase in advertising prices.

Overloaded advertising blocks on the radio prompted advertisers to retreat. Zenith analysts are observing a reduction in investment in this medium, which translated into a revision of previous forecasts. According to current estimates, this year's radio advertising expenditure will be 2.5% lower than last year.

Forecasts for the press advertising market remain unchanged, and it will shrink by another dozen or so percent this year: by 16.9% for newspapers and by 14.5% for magazines.

The outdoor advertising market is increasingly feeling the effects of the implementation of the landscape act. Due to the tidying up of urban space, the number of carriers is decreasing. Zenith forecasts a slight – by 1.1% – decline in OOH advertising expenditure this year and stabilization of this market segment in the coming years.

This year in cinemas began with further increases in attendance. Zenith analysts expect that the excellent condition of the cinema market will translate into faster growth in advertising expenditure in this medium and estimate its dynamics at 3.8%.

Forecast for the global advertising market

Global advertising expenditure will grow by 4.2% this year, and their total will amount to USD 559 billion by the end of the year. The growth dynamics are lower than in 2016 (4.8%), but it should be recalled that 2016 was the year of the US presidential elections, the Summer Olympics in Rio, and the European football championships – events that drive advertising expenditure growth every four years. Thanks to them, the global advertising market grew by about USD 6 billion in 2016.

The growth of the global advertising market results from the acceleration of growth in the markets of Latin America and Central and Eastern Europe, as well as the continued high growth dynamics of the Asia-Pacific markets.

Recovery in Latin America and Central and Eastern Europe

The economic situation in Latin American countries is improving. Brazil has emerged from its longest recession since the 1930s, and Argentina, thanks to the economic recovery, is finally beginning to cope with inflation. Growth in the Central and Eastern European region is also gaining momentum after conflicts and sanctions hit the markets of Russia, Ukraine, and Belarus in 2015.

According to Zenith's forecast, the advertising market in Latin America will grow by 4.1% this year (in 2016 it recorded a decline of 0.2%), and in Central and Eastern Europe by 7.3% (compared to 4.1% growth in 2016).

Asia-Pacific region leads global growth

Advertising expenditure in the Asia-Pacific markets will grow by USD 30 billion between 2016 and 2019, thus bringing 43% of the global advertising market's growth in that period. This region will bring over 50% more advertising funds than the second fastest-growing – North America, whose value will grow by USD 20 billion in the same period (29% of global market growth). The Western Europe region will grow by USD 8 billion (11% of growth), Central and Eastern Europe by USD 4 billion (6%), and Latin America by USD 3 billion (4%).

By 2019, the value of advertising expenditure in the Asia-Pacific region will reach 33.4% of total global expenditure (compared to 32.1% in 2016), thus constituting more than 1/3 of the global advertising market for the first time. The advertising market of the Asia-Pacific region will remain smaller than the North American market, which in 2019 will account for 36.6% of the global market, but the difference between them is shrinking. As recently as 2013, the North American advertising market was worth USD 35 billion more than the Asia-Pacific market, but in 2016 the difference fell to USD 27 billion, and according to Zenith's forecast, in 2019 it will decrease to USD 18 billion.

The British market is dragging down Western Europe

Between 2011 and 2016, the United Kingdom stood out in terms of growth dynamics compared to Western European markets. The British market grew by an average of 7.3% per year, while average annual growth in the rest of the region's markets was only 0.4%. However, the economic slowdown, rising inflation, and uncertainty related to the parliamentary elections and the upcoming negotiations on the UK's exit from the European Union contributed to a significant reduction in the growth dynamics of advertising expenditure in 2017. According to Zenith's forecast, the British advertising market will grow by only 0.9% this year (in 2016 it grew by 9.6%), compared to 2.4% growth in the rest of Western Europe. The decline in growth in the UK is dragging down the growth of expenditure for the entire region from 4.6% in 2016 to 2% in 2017.