October 7, 2019 / 11:06 AM / 9 days ago

Global ad spending dented by weaker British, German economies

(Reuters) - Global advertising spending in 2019 is expected to grow lower than a previous estimate, hurt by recession fears in the United Kingdom and Germany, despite strong growth in digital ad budgets in the United States.

Industry forecaster Zenith cut its forecast to 4.4% growth from 4.6%, blaming a weaker trading globally and slowdowns in Europe and Asia. Global ad spending rose 6.7% in 2018.

With major European economies teetering on a recession, owing to trade tensions and the uncertainty around Brexit, businesses have tightened their purse strings, in turn hurting advertising budgets.

Zenith, owned by French advertising group Publicis (PUBP.PA), forecast that global ad spending will reach $640 billion this year, with a 4.3% rise in 2020 and 4.4% in 2021, down from previous forecasts of 4.4% growth in 2020 and 4.3% in 2021.

The forecaster said it would normally expect an increase in ad spending in 2020, benefiting from U.S. elections, the Summer Olympics and the UEFA Euro 2020 tournament.

“But given current political and economic uncertainty, brands are being cautious about committing to extra spending at the moment,” it added.

Zenith forecast a 0.6% decline for ad spending in Germany this year, down from a prior expectation of fall of 0.4%. It also reduced its growth forecast for the UK to 3.3% from 3.9%, its slowest rate of growth since 2011.

German industrial orders fell more than expected in August on weaker domestic demand, data showed on Monday, adding to signs that a manufacturing slump is pushing Europe’s largest economy into recession.

Expenditure on advertising in China, the world’s second biggest spender after the United States, is also slowing.

However, small and medium-sized companies advertising for the first time on Facebook Inc (FB.O) and Google (GOOGL.O) are continuing to drive growth in the United States, where consumer spending chugs along at a steady pace.

“Small businesses in the U.S. are spending heavily on social media and paid search, and are fuelling much of the global growth of these channels,” Zenith researchers said.

The firm said ad spending on social media is expected to grow 20% in 2019, overtaking print to become the third-largest advertising channel.

Reporting by Uday Sampath in Bengaluru; Editing by Shailesh Kuber

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