GroupM Forecasts Ad Spend Growth, Though Less Than Last Year

Despite perilous economic conditions and geopolitical turmoil like the war in Ukraine, WPP's GroupM thinks global ad spend will keep growing. Excluding political ad spending, GroupM’s “This Year Next Year” global mid-year forecast expects 8.4% growth in global ad spend this year. The projection is just below its December estimate, which put growth at 9.7%. In the U.S., ad spend is forecast at 9.3%, also near the 9.8% December estimate for that market. The forecasted numbers mean ad spend is projected to keep growing, albeit slower than it did last year, when spend was up 25% compared to 2020. It's better than it seems Citing low unemployment levels, high household savings and strong new business formation, GroupM estimates that some bright spots will buoy the market and contribute to growing ad spend. While interest rates are indeed rising, they're coming up from historically low levels. That fact leads GroupM to assume economic deceleration, rather than a decline. GroupM's outlook is basically on par with other estimates. Publicis Media agency Zenith last week released its own biannual forecast and projected a similar growth rate of 8%. Predictions aren't all rosy, however. The media group assumes that some marketers will cut spend and that some markets will experience recessions. But GroupM believes that will be offset by high spend by other marketers, and growth in other markets. With consumer price inflation pegged at 6.9% compared to last year's 3.7%, the WPP subsidiary asserts overall ad spend should still surpass that of 2019. "Higher interest rates by themselves do not necessarily lead to negative actions on the overall economy, let alone on the advertising economy," said Brian Wieser, global president, business intelligence at GroupM, in a conference call. A slowdown in China In some markets, 2022 projections are higher than GroupM estimated in its December 2021 forecast. China's is not one of them. The world's second-largest market is contributing to the decelerating overall growth as advertisers there curb spend. Estimations peg China's growth at 3.3% now versus the 10.2% growth GroupM estimated for that market when it released its last report in December. GroupM attributes this big reversal to pandemic-related lockdowns in the first half of the year paired with supply-chain bottlenecks. "They are 20% of the global market. And so that does have an impact on the total global totals as well," said Kate Scott-Dawkins, global director, business intelligence at GroupM, during the conference call. The markets expected to lead the way include India, which is projected to experience double-digit growth, and France, Germany, Brazil and Canada, which the group expects will grow by high single digits. The U.S., Australia and the U.K. are estimated to grow a bit slower, in the mid-single digits. Digital decelerates Google, Facebook, Alibaba, ByteDance and Amazon generated $408 billion in ad revenue last year, accounting for 53% of the global total, but this year the outlook for digital ad spend is decidedly worse. GroupM expects it to grow by 12% in 2022, compared to the stunning 32% growth the industry saw last year. Even though growth is slowing, digital still accounts for most advertising today, and it's still growing faster than any other category. Including traditional media's digital extensions—meaning, anything other than a pure-play platform—digital media is expected to account for $617 billion in 2022, or 73% of total global ad spend. "Digital is going to grow faster than other media, still, because it's just where so many of the underlying drivers of growth for advertising are," said Wieser. Dentsu Predicts Global Ad Spend Will Hit a Record $745 Billion TV spend goes global A few subcategories will experience notable change this year, according to the report. GroupM expects TV ad spend to grow 4% in 2022 and become more global in nature. Streaming services in the U.S. are making investments in local-language content to compete in foreign markets, and connected TV should capture more of the advertising pie. Connected TV+ advertising is estimated at $21 billion in 2022, up 24% from last year and making up 12% of all global TV spend. GroupM attributes this to a growing number of streaming platforms—including Pluto, Tubi and Roku—attracting money that would otherwise have gone into digital channels. The group thinks growth should flatten in coming years, but for now it represents a significant change in the way marketers think about TV advertising. Expectations for OOH advertising sit at 12% growth, a slight decline from last year. The media group attributes the decline entirely to the ad spend slowdown in China. Excluding China, the group predicts 14.3% out-of-home growth in 2022, and it expects OOH more broadly will rebound and surpass pre-pandemic volumes by 2024. GroupM and Zenith Project Ad Spend Will Grow, Led by Digital

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GroupM Forecasts Ad Spend Growth, Though Less Than Last Year's, Despite Economic Conditions

Global advertising is projected to grow 8.4% this year

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