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Report: luxury ad market recovers in 2017

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Consumer spending on personal luxury goods declined by 0.5% in 2016 in what has been the first year without growth in eight years, as a drop in tourists after series of terrorist attacks in Europe and poor spending particularly among Chinese tourist prompted a slump in the once-booming sector, Bain & Company’s Luxury Goods Worldwide Market Study, Fall-Winter 2016 revealed.The US, China and Japan market, however, will be expected to prompt 80% of the growth in luxury advertising to 2018, and rise the luxury ad spend by 2.9% in 2017, recovering from a 0.5% contraction in 2016, the new edition of Zenith’s Luxury Advertising Expenditure Forecasts suggested.The report expected the luxury goods market to strengthen further in 2018, growing by 3.9%, as tourist numbers have recently started to pick up again.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% 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.Luxury ad spend continues to lag behind as a wholeLuxury advertising is still growing less rapidly than advertising as a whole. Across the 23 markets that the report examines, luxury advertising grew by 0.7% each year between 2013 and 2016, compared to 4.8% annual growth for the whole ad market. Even though luxury advertising growth is expected to accelerate to 3.4% a year between 2016 and 2018, it will continue to lag behind the market as a whole, which will grow 4.4% a year across all categories.While high luxury brands, including watches, jewellery, fashion and accessories, are among the most iconic in the industry, its ad spend shrank 3.9% last year. Broad luxury such as automobiles, cosmetics and perfumes accounted for 74% of luxury ad spend in 2016, and grew 0.7% that year. The report suggested that broad luxury ad spend will grow by 3.7% in 2017 and 4.6% in 2018, while high luxury ad spend will grow by 0.8% and 1.6% in 2018.The internet will overtake print to become the main luxury advertising medium in 2018Print is currently the principal medium for luxury advertising, accounting for 32.7% of ad spend in 2016, compared to 31.3% for television and 25.8% for internet advertising.However, the report suggested internet advertising will account for 87% of ad spend growth between 2016 and 2018. By 2018, the internet is likely to be the biggest advertising medium for luxury, accounting for 30.6% of ad spend, compared to 29.9% for television and 29.7% for print. Print will nevertheless remain much more important to luxury than for the ad market as whole: 13.8% of ad spend across all categories will go to print in 2018, down from 16.7% in 2016, and is likely to remain so for the foreseeable future. 73% of all high luxury adspend went to print in 2016, and 70% is expected 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."

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