The global ad market will continue its recovery from the 2020 slump with 9.1% growth in 2022, after 15.6% growth in 2021, according to Zenith’s Advertising Expenditure Forecasts report. It estimates that global adspend will reach US$ 705 billion in 2021, up from US$ 634 billion in 2019, and will rise to US$ 873 billion by 2024.
The report said that global adspend will expand by 5.7% in 2023 and 7.4% in 2024 as brands continue using advertising to spur further growth in ecommerce. It also predicted that digital advertising, as a whole, will exceed 60% of global adspend for the first time in 2022, reaching 61.5% of total expenditure, and will increase its share to 65.1% by 2024.
However, the forecasts were done before the emergence of the Omicron variant of Covid-19 variant, and, therefore, does not take a new wave of coronavirus or any other disruption into account.
As per it, COVID-19 setbacks have extended the period of heightened digital transformation.
Businesses have continued their heightened investment in digital transformation, during a period in which many expected to ease back as consumers returned to shops, post-pandemic. Digital advertising has therefore been stronger in the second half of this year than previously expected. Zenith now estimates that digital advertising will grow by 25% year-on-year in 2021, compared to the 19% estimated in the previous forecast, published in July.
Zenith expects digital transformation to slow down, but not go into reverse, as the pandemic eases in 2022 and beyond. The pandemic has accelerated trends that were already fundamentally reshaping the economy, and will continue to do so. Zenith forecasts 14% growth in global digital adspend in 2022, up from the previous forecast of 10%, followed by 9% growth in 2023 and 10% in 2024.
It estimates that retailer media advertising surged from 24% growth in 2019 to 53% in 2020, and then 47% in 2021, when it totalled US$ 77 billion. This is equivalent to the sums spent on newspaper, magazine, radio and cinema advertising combined, and accounts for 20% of all expenditure on digital display and paid search advertising. By 2024 retailer media adspend is expected to reach US$ 143 billion, and 27% of display and search. The rise of the digital economy has also stimulated other forms of advertising, including brand campaigns on television and out-of-home, where digital brands are now prominent.
The share of global GDP contributed by advertising had been rising steadily before the pandemic, from 0.72% in 2014 to 0.75% in 2019. After the step-change in digital media consumption and ecommerce last year, it is forecast to reach 0.77% in 2021 and 0.80% by 2024. This will be the biggest rise in advertising’s share of GDP since the late 1990s.
Moreover, adspend in all regions is now well above pre-pandemic levels, and all are expected to grow healthily over the next few years. Zenith forecasts the fastest growth between 2021 and 2024 to come from Central and Eastern Europe and the Middle East and North Africa (MENA), with average annual growth rates of 12.2% and 10.0% respectively. The slowest-growth is expected from the mature markets of Western Europe, where growth is forecast at a healthy 5.3% a year.
However, Zenith expects the biggest contribution to the growth in ad dollars to come from the US, where adspend is forecast to expand by US$ 80 billion between 2021 and 2024. That represents 48% of the entire growth in global adspend over this period. The next-largest growth will come from China (US$ 15.8 billion, or 9% of the total), the UK (US$ 6 billion, or 4%) and Japan (US$ 5.4 billion, or 3%).
It also predicts that social media will be the fastest-growing channel between 2021 and 2024, with an average annual growth rate of 14.8%, closely followed by online video at 14.0%. Paid search will grow by 9.8% a year, primarily driven by retailer media, and out-of-home will enjoy solid 7.4% annual growth as foot and vehicle traffic return to normal. Radio and television will grow marginally, by 2.2% and 1.4% respectively, while print declines by 4.7%.
Social media is becoming more competitive. According to eMarketer, adult social media users in the US are spending 60.4% of their time with Facebook and Instagram this year, down from 74.8% in 2017. That’s the result of the rise of TikTok, which grew from nothing to 15.1% of social media usage over this period.
Zenith expects social media adspend to reach US$ 177 billion in 2022, overtaking television at US$ 174 billion It will rise to US$ 225 billion by 2024, when it will account for 26.5% of all advertising, followed by paid search at 22.5% and television at 21.0%.
Zenith forecasts the cost of television advertising to rise by 11% in 2022, compared to 4% for out-of-home, 3% for digital display, 2% for radio and zero for print. On the other hand, it forecasts online video adspend to increase from US$ 62 billion in 2021 to US$ 91billion in 2024, when it exceeds 50% of this size of television for the first time. Television adspend will rise from US$ 171 billion to US$ 178 billion over the same period.
“As consumers rely ever more on digital technology to connect and entertain them, and to inspire and fulfil their purchases, advertising is playing a greater role in driving sales and brand growth,” said Jonathan Barnard, Head of Forecasting, Zenith. “Over the next three years we expect the ad market to achieve its highest rate of sustained growth since 2000.”
Jai Lala, CEO, Zenith India, said, “Digital transformation in India continues to be a priority with 1 in 2 corporates having digital transformation at their core. The pandemic has further accelerated digital growth amongst consumers with increased consumption across platforms in the area of entertainment, purchase, social, education and finance, amongst others. All these factors have led to a steady increase in adspend making digital the fastest growing medium.”