GLOBAL: After contracting in 2016, expenditure on luxury advertising is set to recover this year and next, with almost all of the growth being taken by online spending, according to a new forecast.
In the latest edition of Zenith's Luxury Advertising Expenditure Forecasts covering 23 countries, the ROI agency anticipates a 2.9% increase in spending in 2016 and a 3.9% rise in 2017.
While these figures mark a welcome return to growth following a 0.5% decline in 2016, luxury advertising is growing less rapidly than advertising as a whole.
Zenith's data show that luxury advertising grew by 0.7% each year between 2013 and 2016, compared to 4.8% annual growth for the whole ad market; and its forecasts for the next two years also show the sector lagging behind the overall market which is set to grow at 4.4% a year across all categories.
While print is currently the principal medium for luxury advertising, accounting for 32.7% of adspend in 2016, compared to 31.3% for television and 25.8% for internet advertising, Zenith predicts that the internet will overtake print to become the main luxury advertising medium in 2018.
Internet advertising is forecast to account for 87% of adspend growth between 2016 and 2018, by when it will account for 30.6% of adspend, compared to 29.9% for television and 29.7% for print.
Zenith attributed the ascent of internet advertising to "broad luxury" advertisers, defined as luxury automobiles and cosmetics & perfumes. "High luxury" (watches & jewellery and fashion & accessories) remains overwhelmingly print-based, it said, with 73% of spending going to print in 2016, a proportion that will dip only slightly to 70% 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 fastest growing regions are expected to be Eastern Europe (which will grow at an average of 10% a year), Latin America (5% a year), and North America and Asia Pacific (4% 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 6% a year.
Data sourced from Zenith; additional content by WARC staff