Global advertising will grow 4.6% in 2013, led by developing markets and digital media, according to ZenithOptimedia's latest advertising forecast.

ZenithOptimedia predicts that global ad expenditure will reach US$525 billion by the end of 2013. As has been the case since the economic downturn began in 2007, this growth will be led by developing markets, which ZenithOptimedia forecasts to grow by 8% on average in 2013.

The company expects Central and Eastern Europe to bounce back after a tough 2012 with 7.4% growth in 2013, while Asia Pacific (excluding Japan) grows by 8.2%, and Latin America grows by 10.1%.

• Global ad expenditure growth forecast to strengthen over the next two years, rising from 3.8% in 2012 to 4.6% in 2013 and 5.2% in 2014
• Developing markets to grow by 8% in 2013, and internet advertising by 15%
• Eurozone ad expenditure to return to slow growth in 2013 after decline in 2012
• The US to contribute 29% of adspend growth between 2011 and 2014
• Developing markets to contribute 59% of adspend growth between 2011 and 2014, and increase their share of global adspend from 33% to 36%
• Internet's share of expenditure to rise from 16.0% in 2011 to 21.4% in 2014, exceeding 30% in seven markets
• European football championship, Olympics and US elections to help television attract a record 40.4% of global adspend in 2012

North America has had a particularly strong 2012 thanks to record Olympic audiences and heavier than expected political advertising in the US. Despite the tough comparison, ZenithOptimedia still expects solid 3.6% growth from North America in 2013.

Digital media - particularly internet advertising - are supplying most of the growth in spend by medium. ZenithOptimedia forecasts internet advertising to grow by 15.1% in 2013, while traditional media grow by 2.3%.

ZenithOptimedia has reduced its forecast for global growth in 2012 to 3.8%, from the 4.3% it published in June. Advertisers have cut spending in the eurozone in response to further economic weakness, and the company now expects eurozone spend to shrink 3.1% over the course of this year, compared to the 1.1% decline itforecast in June.

Now that advertisers have recalibrated their expectations for future growth in the region, ZenithOptimedia expects budgets to resume slow 0.9% growth in 2013, strengthening to 2.3% in 2014, assuming the eurozone remains intact.

"Advertisers are broadly continuing to invest, despite the global economic concerns and issues," said Steve King, global chief executive officer at ZenithOptimedia Group.

"However, they are seeking to ensure that any expenditures are delivering strong return on investment. The US continues to deliver solid growth. This, combined with the growth in developing markets and in digital media, has helped mitigate the drop in eurozone spending."

Advertising expenditure by region

Uncertainty over the future of the eurozone has weighed on the global economy since ZenithOptimedia published its last forecast in June. The eurozone as a whole has slipped from stagnation to probable recession; other markets in Europe have weakened; and many developing markets have slowed as their exports to the developed world have fallen off, although their growth generally remains much firmer than in developed markets.

Nevertheless, ZenithOptimedia still forecasts recovery in ad expenditure growth over the next two years. The company expects sustained and strong growth in Asia Pacific and Latin America, rapid recovery in Central and Eastern Europe, slower but substantial growth in North America, and slow improvement in Western Europe.

Overall ZenithOptimedia forecasts ad expenditure to decline 3.1% in the eurozone in 2012.

Adspend growth in the eurozone - key markets, 2012

The advertising recovery remains robust in North America, which ZenithOptimedia has upgraded from 3.6% growth in 2012 to 4.2%. North America has been boosted this year by the very strong performance of the Olympics in the US, where ratings were 30% higher than expected. 41 million viewers watched the opening ceremony, making it the most-watched Summer Olympics opening ceremony in US history.

Political advertising in the run-up to the November elections has also been much stronger than forecast. Political spending on spot TV is currently 90% higher than in the 2010 elections. ZenithOptimedia expects the elections to add about US$3 billion in net ad expenditure to the US ad market this year.

ZenithOptimedia predicts that Brazil will overtake the UK to become the fifth largest ad market in 2013, and in 2014 Russia will overtake Canada to become the ninth largest. China is already third largest and is steadily approaching Japan.

Top ten ad markets

Global advertising expenditure by medium

The internet is by far the fastest growing medium - ZenithOptimedia forecasts it to grow on average by 15% a year between 2011 and 2014. Display is the fastest-growing sub-category, with 20% annual growth, thanks to the rapid rise of social media and online video advertising.

Display advertising is now growing substantially faster than paid search (which ZenithOptimedia forecasts will grow by 14% a year to 2014) and classified (6% a year). Display advertising accounted for 36% of internet advertising in 2011; by 2014 ZenithOptimedia expects this proportion to increase to 40%.

Overall, ZenithOptimedia predicts internet advertising will increase its share of the ad market from 16.0% in 2011 to 21.4% in 2014. Internet advertising already accounts for more than 25% of ad expenditure in five markets (Denmark, Norway, South Korea, Sweden and the UK), and by 2014 ZenithOptimedia expects it to account for more than 30% in seven markets (Australia, Canada, Denmark, Norway, South Korea, Sweden and the UK).

In the most advanced market - the UK - internet advertising attracted 33% of expenditure in 2011, and ZenithOptimedia forecasts it to attract 40% in 2014.

The internet is also the biggest contributor of new ad dollars to the global market. Between 2011 and 2014 ZenithOptimedia expects internet advertising to account for 60% of the growth in total expenditure.

The next biggest is television, which ZenithOptimedia forecasts to contribute 41% of growth. (The two add up to more than 100% because newspapers and magazines are subtracting from total growth). Television's share of the global ad market has risen steadily over the last few years: it reached 40.2% in 2011, up from 36.9% in 2005.

The amount of time viewers spend watching television has increased, and even though viewers are presented with a wider choice of channels than ever, the biggest television events are attracting record audiences.

The rise of the developing markets has helped lift television's share as well, since these markets tend to rely heavily on television. ZenithOptimedia expects the European football championship, the Summer Olympics and the US elections to help lift television's share to 40.4% of global ad expenditure in 2012, its highest ever.

The internet has risen principally at the expense of print. Between 2001 and 2011 the internet's share of global advertising rose by 14 percentage points, while newspapers' share fell 12 points and magazines' share fell by five points.

ZenithOptimedia forecasts newspaper and magazine advertising to continue to shrink, by an average 2% a year over the rest of our forecast period. Note that these figures include only advertising in printed editions of these publications, not on their websites, or in tablet editions or mobile apps, all of which are picked up in our internet category. The prospects for newspaper and magazine publishers are therefore not quite as bleak as our headline figures would make them appear.

Advertising expenditure by medium