GroupM and Zenith Project Ad Spend Will Grow, Led by Digital

Global advertising spend grew double digits this year, according to two new forecasts from WPP's media group, GroupM and Publicis Groupe media agency Zenith. Excluding political ad spending, GroupM's "This Year Next Year" global end-of-year forecast expects 22.5% global growth in media ad revenue during 2021 and forecasts 9.7% growth for 2022. This is compared to a 5.8% decline in 2020. It amounts to the ad revenue that GroupM tracks across certain categories reaching $766 billion by the end of the year. The group projects that number will exceed $1 trillion by 2025."The advertising industry is in a ridiculously healthy state at the present time," Brian Wieser, global president, business intelligence at GroupM told Adweek. "The 23% growth rate we're calling for in 2021 is possibly one of the strongest rates of growth ever for the industry." Behind the numbers The boom, Wieser says, is not due to individual marketers increasing their ad budgets. "The reality is that there are more new businesses showing up who are driving so much of the spending," he said. Sources of growth include a proliferation of new businesses, an increased reliance on ecommerce across the board, digital businesses that prioritize top-line growth over profitability—and thus invest more in advertising—and Chinese manufacturers using digital platforms to market to overseas consumers. "The pandemic made it more appealing for small businesses to form and, if those small businesses advertised, they probably did so at a higher level of intensity than the businesses they replaced," said Wieser. The growth is concentrated in certain global markets, with the U.S., the U.K. and China accounting for 70% of the total, despite making up just 60% of the total market. While some advertising executives predict that rising GDP will propel ad spend to higher rates, GroupM's forecast states that the correlation between GDP and advertising spend is weaker than previously assumed, as 2020 ad revenues performed better-than-expected, only declining 5.8% last year. Digital leads the way Digital advertising is booming and GroupM expects it to have grown 30.5% in 2021 (excluding U.S. political advertising). The group projects it will grow 13.5% in 2022. Digital now makes up the lion's share of advertising spending and is expected to account for 64.4% of total advertising this year, up from 60.5% in 2020. GroupM Targets $75 Million Investment in Black-Owned Media The typical large brand spends less on digital ad spend than the high average, said Wieser. Large marketers are spending around 40% to 50% (depending on the market) in television and around 40% to 50% in digital, he said. "Yes, that leaves crumbs for everyone else," he said, "but that is the reality of the business at this point." And GroupM estimates the world's largest media platforms outside of China—Alphabet, Meta and Amazon—account for between 80% to 90% of global digital ad spend. Zenith's projections are lower Also forecasting growth for the next few years is Zenith’s Advertising Expenditure Forecasts report, which reports advertising spend growth for this year of 15.6%—reaching $705 billion—to be followed by further increase of 9.1% in 2022. The forecast includes continual increase of spend through 2024, when it is it predicted to reach $873 billion (a year-over-year rise of 7.4%) as brands leverage more digital channels such as ecommerce, social media, online video and video on demand. Emerging markets and channels By geography, the fastest-growing regions will be central and eastern Europe—as well as the Middle East and North Africa— with all regions now seen to be above the pre-pandemic levels of 2019 and continuing to grow looking toward 2024. Still, Zenith expects most ad dollars to hail from the U.S. and forecast spend to expand by $80 billion from 2021 and 2024. As it becomes more competitive, social media is seen to be the fastest-growing channel over the coming three years, growing annually by around 14.8%, followed by online video at 14% and paid search by 9.8%. A large part of that surge is down to the rise of TikTok, which has become a major advertising player in the last two years. After a 25% year-over-year increase in digital advertising spend, next year it is predicted that it will make up more than 60% of global ad spend, with online video growing by 14% alone as streaming platforms are further adopted by viewers. That increase will rise to 65.1% by 2024 and online video spend increasing to $91 billion that year, exceeding more than half of television spend for the first time. By contrast, linear TV spend will only increase from $171 billion to $178 billion between 2021 and 2024. That trend of shifting from linear television viewing to streaming will see also lead to an 11% increase in the cost of advertising on TV next year—more than double that out of home (4%) digital display (3%) and radio (2%)—which could lead to some marketers rethinking the focus of their spending. Ad Revenue Will Grow 22% in 2021, GroupM Projects