‍Luxury advertising spending will grow by 3 per cent in 2016, compared with 1.9 per cent in 2015, according to the latest Luxury Advertising Spending Forecast released today by Power Media. After an embarrassing 2015, this acceleration in growth has been thred by economic recovery in Asia and Eastern Europe. Luxury advertisers will spend a total of $10.9 billion on ads in 18 major markets in 2016, up from $10.6 billion in 2015.

This is the second edition of the full-year luxury advertising forecast, which includes spending in 18 major luxury markets. As a forecast report conducted by Power Media for many years, it provides historical media expenditure data and forecasts. However, the report is particularly focused on the luxury sector and also includes a number of sub-categories, including luxury cars, perfumes and makeup, fashion and accessories, watches and jewellery.

The growth rate of the luxury advertising market slowed from 2.9 per cent in 2014 to 1.9 per cent in 2015 due to the slowdown in the BRIC market and the impact of local conflicts and terrorism. In Asia, advertising spending fell 1.4 per cent and in Eastern Europe by 20.3 per cent (mainly as a result of the oil crisis and the devaluation of the Russian ruble), but earnings were boosted by strong growth in North America (3.6 per cent) and Western Europe (4.7 per cent).

Strength Media predicts that Asia will return to 2.9 per cent growth in 2016 and the recession in Eastern Europe will slow to 2.8 per cent. North America will continue to grow strongly at 3.9 per cent, but Western Europe will decline to 1.7 per cent. Overall, luxury advertising spending in the 18 major markets is forecast to grow by 3% in 2016.

Compared with the overall advertising industry, the growth rate of luxury advertising is slightly slower. In 18 major markets, luxury advertising grew by 2.9% in 2014, while the overall advertising market grew by 5.6% and by 1.9% in 2015 (compared to 4.1% overall). In 2016, the luxury market grew by 3.0% compared to the overall growth rate of 4.5%, and we expect this long-term weakness to continue.

The U.S. and China drive growth in luxury advertising

Between 2015 and 2017, Power Communications predicts that luxury advertising will grow by $705 million. Eighty-two percent of the increase came from the United States ($347 million) and China ($228 million). The U.S. and China are the first and second largest luxury advertising markets, accounting for 45% and 21% of luxury advertising in 2015. Germany is the third largest market, followed by France and the UNITED Kingdom. France is expected to grow very weakly due to long-term unemployment, lack of market confidence and low economic growth. Strength Media predicts that the UK will overtake France as the fourth-largest luxury advertising market this year.

Digital advertising will be the largest luxury advertising medium in 2017

Digital advertising is by far the biggest contributor to luxury advertising growth, maintaining double-digit growth rates.Luxury advertisers are expected to spend $837 million on digital advertising between 2015 and 2017. During that period, television, radio and film will grow by a total of $26 million; outdoor advertising will shrink by $10 million; and planes will shrink by $150 million.

Print media will account for 28.6% of luxury advertising by 2017, down from 31.9% in 2015. Tv advertising market share will also decline over the same period, from 32.7 per cent in 2015 to 30.7 per cent in 2017. In 2017, the digital media market share will grow from 26.3% in 2015 to 32.1%, when it will replace television and print media as the single largest medium for luxury advertising.

Print advertising remains the most important medium for "high-end luxury" advertisers

Despite the decline in market share, print advertising remains particularly important for advertisers in the luxury industry, particularly in the fashion and accessories and watches and jewelry categories. In 2015, advertisers in the fashion and accessories category spent 83% of their budgets on print advertising and 60% on watches and jewelry. Print media content - especially glossy magazines - provides a high-quality, immersive and enjoyable reading experience and is the ideal environment for luxury advertisers to demonstrate their brand value.

Note:The 18 major markets are China, Colombia, France, Germany, Hong Kong, Italy, Malaysia, Mexico, the Netherlands, Peru, Russia, Singapore, South Africa, South Korea, Spain, Taiwan, the United Kingdom and the United States.