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Luxury ad spending is expected to grow by 2.4% this year and by 2.8% next year in the aggregate across 23 key markets, says Zenith in its latest forecast. The forecasted growth rate trails expected increases in overall ad spending in those markets, though the luxury advertising market appears to have rebounded after contracting in 2016.

Luxury advertisers have been slower to make the move to digital than other advertisers, per the report. Digital advertising comprised 39% of all ad spending last year in the 23 markets covered in the analysis, but only 30% of luxury brands’ ad spend. Likewise, this year digital will occupy 42% of all ad spending in the group of markets covered, but a smaller share (33%) of luxury brands’ ad dollars.

Some luxury categories are shifting to digital at a faster rate than others, though. Luxury Hospitality brands, for example, are expected to spend half of their advertising dollars on digital this year, up from 47% last year. Luxury Automobile advertisers will also spend an above-average portion (39%) of their ad investments on digital, but advertisers in luxury Fashion and Accessories will allocate just 13% of their ad spending to digital.

It appears that print still holds a strong edge over digital for the so-called “high luxury” type. This includes Watches & Jewelry and Fashion & Accessories – two areas that are expected to direct below-average proportions of their budgets to digital. Instead, high luxury brands are forecast to allocate fully 55% of their budgets to magazine advertising next year, down only slightly from 57% last year. Zenith attributes this to these brands being more “exclusive and iconic,” and therefore more willing to invest in “prestigious media” that may have lower reach.

“Broad luxury” brands – which include Automobiles, Fragrancy & Beauty and Hospitality – have been more apt to spend on digital. Yet these spent the largest share (41%) of their budgets on TV last year, as they chased broader reach via mass media.

Nevertheless, digital is expected to account for the lion’s share of ad spend increases. In fact, luxury advertising in digital media is forecast by Zenith to grow by $886 million between 2017 and 2019. That’s more than 30 times the forecast increase in luxury TV advertising ($27 million), with only two other media – cinema advertising (+$21 million) and radio advertising (+$2 million) – expected to see any growth.

In other highlights from the report:

  • The US is by far the world’s largest luxury advertising market, at more than twice the size of the Chinese market last year ($5.2 billion and $2.1 billion, respectively);
  • Together, the US and China accounted for 61% of 2017’s total luxury ad spending across the 23 markets analyzed; and
  • China is the market where luxury advertisers are most heavily invested in digital, as 53% of ad spend there was digital last year, forecast to grow to 68% by next year.

About the Data: All figures are in US dollars. The 23 markets included in the report are Australia, Brazil, China, Colombia, France, Germany, Hong Kong, Italy, Japan, Malaysia, MENA, Mexico, the Netherlands, Peru, Russia, Singapore, South Africa, South Korea, Spain, Switzerland, Taiwan, United Kingdom and the US.

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