The market will strengthen further in 2018, growing by 3.9 per cent. The recovery will be led by luxury advertisers in the US, China and Japan, which together account for 80 per cent of the growth in luxury adspend to 2018.
This is the third annual edition of the Luxury Advertising Expenditure Forecasts, which examines expenditure on luxury advertising in 23 key luxury markets.* As with Zenith’s Advertising Expenditure Forecasts, it provides historic expenditure figures and forecasts by medium. However, this report focuses specifically on luxury advertising, together with the sub-categories of luxury automotive, fragrances & beauty, fashion & accessories, and watches and jewellery.
Consumer spending on personal luxury goods was stagnant in 2016, according to Bain & Company’s Luxury Goods Worldwide Market Study, Fall-Winter 2016. This was the first year without growth since 2009, as spending by tourists declined: the number of tourists fell after terrorist attacks in Europe, and spending per tourist also fell, particularly among Chinese tourists. This led to the 0.5 per cent drop in luxury adspend in 2016.
As the luxury ad market recovers in 2017 and 2018, the fastest growing regions will be Eastern Europe (which will grow at an average of 10 per cent a year), Latin America (five per cent a year), and North America and Asia Pacific ( four per cent a year each). The Middle East and North Africa, suffering from political instability and low oil prices, will continue to shrink, at an average rate of six per cent a year.
Luxury advertising is growing less rapidly than advertising as a whole. Across our top 23 markets, luxury advertising grew by 0.7 per cent each year between 2013 and 2016, compared to 4.8 per cent annual growth for the whole ad market. Even though we expect luxury advertising growth to accelerate to 3.4 per cent a year between 2016 and 2018, it will continue to lag behind the market as a whole, which will grow 4.4 per cent a year across all categories.
Luxury goods advertising can be divided into two categories: high luxury (watches & jewellery and fashion & accessories) and broad luxury (luxury automobiles and cosmetics & perfumes). High luxury brands are among the most iconic in the industry, but broad luxury accounted for 74 per cent of luxury adspend in 2016, and grew 0.7 per cent that year, while high luxury adspend shrank 3.9 per cent. We expect broad luxury to drive most of the growth in luxury adspend to 2018: we forecast it to grow by 3.7 per cent in 2017 and 4.6per cent in 2018, while high luxury adspend will grow by 0.8 per cent in 2017 and 1.6 per cent in 2018.
Print is currently the principal medium for luxury advertising, accounting for 32.7 per cent of adspend in 2016, compared to 31.3 per cent for television and 25.8 per cent for internet advertising. However, almost all new luxury advertising goes to internet advertising – we forecast it to account for 87 per cent of adspend growth between 2016 and 2018. By 2018 we forecast the internet to be the biggest advertising medium for luxury, accounting for 30.6 per cent of adspend, compared to 29.9 per cent for television and 29.7 per cent for print. Print will nevertheless remain much more important to luxury than for the ad market as whole: 13.8 per cent of adspend across all categories will go to print in 2018, down from 16.7 per cent in 2016.
The ascent of internet advertising can be largely attributed to broad luxury advertisers; high luxury is overwhelmingly print-based, and will remain so for the foreseeable future. 73 per cent of all high luxury adspend went to print in 2016, and we expect 70 per cent to go to print in 2018.
“Luxury advertisers are having to respond to consumers’ changing expectations,” said Vittorio Bonori, Zenith’s Global Brand President. “Consumers are now looking for luxury experiences that are personal and relevant to them, and targeted brand communication is central to creating this extra brand value.”
*The 23 markets 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 United Kingdom and the United States of America.
More like this
Programmatic trading has evolved far from its roots of building cheap coverage from remnant inventory. It now often occurs in premium environments, using private deals in which agencies can use their scale and relationship with publishers to ensure their clients ads are displayed in the right place and at the right price.22nd Nov 2017 Insight News
The customer is king and as such can be hard on any brand that doesn't fulfill his or her expectations to the fullest. According to a new report by SAP Hybris, customers worldwide have several reasons to turn their backs on brands.20th Nov 2017 Insight News
In this very special episode of Media Voices, the team discusses the conflux of news about BuzzFeed, Vice, Mashable and many more and ask whether the dream of a digital future for publishers is over before it began.20th Nov 2017 Insight News
The Native Advertising Institute just held their third annual Native Advertising Days Conference in Berlin, where the world’s best thinkers and practitioners of native advertising came together to share their insights. Here are 10 of the top tips.17th Nov 2017 Insight News
Recently, there has been a period of time where there was somewhat of a slow-down in international brand activity as companies focused on shoring up their bases. However, this year we have seen an increasing number of reports surfacing about media companies adopting a more global outlook again – at least in certain segments. Does this mean a renewed focus on brand licensing, and in what form? And what is the outlook as we head into 2018?13th Nov 2017 Features
CDS Global and Zeddit announced a strategic technology partnership in the UK and Australia to provide advanced subscriber conversion capabilities for print magazine publishers. The partnership will focus on improving the conversion of visitors to magazine websites into subscribers for CDS Global clients.13th Nov 2017 Industry News
One of the biggest drives for publishers in the past decade or two have been transitioning their print content to digital. For some it is all about maintaining the magazine's brand essence online, yet others have enjoyed success in amalgamating print publications to create new web first brands.13th Nov 2017 Features
Publishers’ growing urge to be platform agnostic needs to be balanced by focussed efforts to ensure content remains platform specific.13th Nov 2017 Features
The Future Today Institute recently published its 2018 report into the emerging tech trends that are likely to shape the publishing industry in 2018. Here, we speak to Amy Webb, the founder of the organisation, about the development of study, and explains how better scientific modelling undertaken today can help us to predict future technologies.20th Nov 2017 Features
Visit our Youtube channelFIND OUT MORE
FIPP newsletters allow you to keep up with industry trends, research, training and events across the worldFIND OUT MORE
Get global coverage of your launches, company news and innovationsFIND OUT MORE
What’s happening now, what’s coming next