Global Luxury Ad Market Set to Recover

April 28, 2017

After contracting by a marginal 0.5% last year, luxury ad spending across 23 key markets is set for growth this year and next, says Zenith in its latest forecast. The US, China and Japan will provide 80% of the coming growth, predicted to be 2.9% this year and a further 3.9% next.

While those 3 markets will drive the majority of ad spending increases, the fastest-growing advertising regions will be Eastern Europe (10% per annum) and Latin America (5% per annum), according to the forecast. Political volatility and depressed oil prices will, by contrast, lead to a 6% average drop per year in luxury ad spend in the Middle East and North Africa.

Print to Cede Leading Position in Luxury Advertising

Print is the largest advertising channel for luxury ad spending worldwide, accounting for almost one-third (32.7%) of spending last year, slightly ahead of TV (31.3%) and with the internet trailing but still influential (25.8%).

Fast forward a couple of years, though, and with internet advertising’s torrid pace of growth (which will see it account for 87% of luxury ad spending growth) it will become the biggest medium. Zenith forecast some 30.6% of luxury ad spending in 2018 to be spent on internet advertising, edging TV (29.9%) and print (29.7%).

The report points out that print will nonetheless remain far more influential in luxury ad spending than in the broader market, where it will command only 13.8% of ad spending in 2018. As MarketingCharts’ own primary research into advertising media has found, both magazine and newspaper advertising have a strong impact on consumer purchase behavior relative to their reach.

Broad Luxury is Where the Money’s Going

There’s an important footnote to the channel allocation data: the luxury category. High luxury – such as watches & jewelry and fashion & accessories – remains very much dominated by print. In fact, almost three-quarters of high luxury ad spending went to print media last year, and that shouldn’t change too much by 2018 (70%). Ads for those well-regarded brands – such as Rolex, the most reputable company in the world this year – are most often found in print, it seems…

However high luxury only accounts for about one-quarter (24%) of luxury ad spending. Most ad spend, instead, goes to broad luxury, such as luxury automobiles and cosmetics & perfume. And it’s here that the internet makes its mark as a growing force within a growing market.

Indeed, broad luxury ad spending is set for much larger increases than high luxury: 3.7% this year and 4.6% next, compared to 0.8% and 1.6%, respectively.

About the Data: The 23 markets that form the basis of Zenith’s forecast are: Australia, Brazil, China, Colombia, France, Germany, Hong Kong, Italy, Japan, Malaysia, Mexico, Netherlands, Peru, Russia, Singapore, South Africa, South Korea, Spain, Switzerland, Taiwan, the United Arab Emirates, the UK and the USA.

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