Global ad spend strengthens on U.S. demand: Zenith

A billboard advertising a car is seen in central Tokyo, Japan June 7, 2016. REUTERS/Toru Hanai

LONDON (Reuters) - Spending on global advertising will grow by a better-than-expected 4.4 percent this year, led by the United States, a leading forecaster said on Monday.

Zenith, owned by France's Publicis PUBP.PA, raised its global growth forecast for this year from the 4.1 percent it predicted in June, despite the uncertainty sparked by Britain's vote to leave the European Union.

The advertising agency also raised its global forecasts for 2017 and 2018, to 4.5 percent and 4.6 percent respectively, from earlier forecasts of 4.3 percent and 4.4 percent. Increased spend on advertising reflects increased confidence levels by companies.

“This upgrade is mainly the result of stronger-than-expected growth in the U.S., where a strong labor market has encouraged consumers to increase their expenditure, and advertisers have fought harder for their share of the expanding market,” it said.

Zenith expects strong spending by pharmaceutical and consumer packaged goods to help U.S. network TV spending to return to growth this year, after it fell 5 percent last year.

It also raised its guidance slightly for Asia Pacific and Western Europe.

The group said that advertisers had so far reacted calmly to Britain’s June 23 vote to leave the EU. Zenith trimmed its 2016 growth forecast for Britain to 5.4 percent from the 5.6 percent figure it predicted before the vote.

“As we have argued before, most of the impact that Brexit will have on the UK ad market will come in the long term,” it said.

It said it expected growth in Britain to slow as the government renegotiates its trading relations with global partners, with its current forecast assuming growth next year of 3.4 percent.

Reporting by Kate Holton; Editing by Elaine Hardcastle