A return to pre-pandemic levels of advertising spend is not expected before 2022, when spending is likely to reach $619bn and grow at a rate of 6.9%, despite a positive start to 2021.
The slow path to recovery is set out in Dentsu’s annual global ad spend report, which expects global advertising investment to grow by 5.8% this year, predicated on the broadcast of major sporting events like the Olympics proceeding as planned.
Global ad spend predictions for the year ahead
Dentsu sees grounds for cautious optimism in its first ad spend report since the onset of the pandemic, predicting that global advertising investment will grow 5.8% through 2021.
This growth is expected to be evenly distributed around the planet with data from 59 markets indicating a uniform bounce back from an 8.8% decline registered in 2020.
$579bn is expected to be spent globally with western Europe, Asia-Pacific and North America leading the way on growth of 7.5%, 5.9% and 4% respectively - led by key markets such as India (10.8%), the UK (10.4%) and France (8.9%).
A pronounced digital shift observed in recent months shows no sign of abating with the sector expected to account for half of all advertiser spend for the first time, led by strong demand for social (18.3%), search (11.0%) and video (10.8%).
Key to the success of 2021 will be the return of major sporting events such as the Tokyo Olympics, Paralympics and UEFA football tournaments to television screens following their postponement last year.
Anticipation of a return to semi-normality is expected to see TV spend increase 1.7% worldwide to reach $169bn, equivalent to a third of all ad spend.
This prognosis remains highly speculative however as a volatile pandemic picture still threatens to snuff out these hypothetical gains, as evidenced by cancellation of Glastonbury.
The Tokyo Olympics hangs in the balance with the Japanese government reportedly concluding that it will be cancelled, preferring to pursue the next available games in 2032. Although in public at least the government remains committed to this summer.
No return to pre-pandemic levels until 2022
The upshot of this uncertainty is that the advertising sector will not recover its pre-pandemic clout until 2022 at the earliest when growth should weigh in at 6.9% to take total spend to $619bn.
As one of the hardest hit sector‘s advertising is expected to benefit more than most from any recovery, though growth will still lag behind travel & Transport (28.4%), media & entertainment (14.5%) and automotive (13.8%).
Peter Huijboom, global chief executive of media at Dentsu International said: “While a return to growth will be welcomed all around, the road to recovery for marketers should be supported by investing in ways that will put consumer intelligence at the heart of their business strategies.“
Stressing the need for a greater understanding of consumer behaviour in a post-pandemic world, Huijboom adds: “To build hyper-empathy in this new reality will require a real focus and investment in data, e-commerce, and new technologies like connected TV as well as building deeper partnerships across all areas of the industry.“
According to a recent IPA report, UK ad spend bottomed out in the closing months of 2020 when renewed lockdown restrictions snuffed out what little festive cheer remained. From this bleak base, however, marketers are confident that the only way is up for 2021.
To assist agencies navigating the pitfalls of a tempestuous economic landscape The Drum published a lockdown survival guide for agencies as hatches are battened down for the third (and hopefully final) lockdown.