Digital advertising pushes global ad spend to new heights

• The report reveals broad-based positivity prior to Omicron rearing its ugly head as the global advertising market extends its recovery from its 2020 nadir, with healthy growth of 15.6% recorded for 2021 expected to drop back to 9.1% in 2022.

• Squinting deep into Zenith’s crystal ball, global ad spend is then likely to moderate further to 5.7% in 2023, before resuming an upward tack in 2024 where growth of 7.4% has been tentatively projected – although this does not factor in the impact of any further disruptive Covid-19 variants.

• The global spending spree is being fueled by brands eager to capitalize on burgeoning social media, online video, connected TV (CTV) and e-commerce channels, which will collectively lift digital’s share of global ad spend above 60% for the first time next year, sitting pretty on 61.5%.

• On this timeline Zenith expects global ad spend to hit $705bn in 2021, way above its pre-pandemic peak of $634bn in 2019, before rising further to $873bn in 2024 without catching a breath.

Digital ad spend conquers all

• Accelerated adoption of e-commerce has turbocharged the rise in digital ad spend, which is now expected to grow by 25% year-on-year in 2021.

• This will rise further by 14% in 2022 before finding its equilibrium of 9% and 10% in 2023 and 2024 respectively.

• These numbers are notably ahead of what Zenith predicted as recently as July when it penciled in 19% digital ad spend growth for 2021 and 10% in 2022.

• Social media ad spending, meanwhile, is a powerhouse all of its own, reaching $177bn in 2022, ahead of the former advertising king television on $174bn.

Advertising flexes its muscles

• A rising tide of spending will ensure advertising becomes a greater component of the global economy, with retailer advertising surging by 47% in 2021 to hit $77bn – equivalent to the combined expenditure on newspaper, magazine, radio and cinema advertising.

• Retailer media already accounts for 20% of all expenditure on digital display and paid search advertising, increasing further to 27% ($143bn) by 2024.

• In turn, the share of global GDP attributed to advertising has risen from 0.75% in 2019 to as much as 0.8% in 2024.

Regional variations

• The fastest growth is expected to come from Central and Eastern Europe as well as the Middle East, with respective growth rates of 12.2% and 10% – with growth lagging somewhat in the more developed markets of Western Europe, which are forecast to grow 5.3% annually.

• In terms of dollars, the greatest contributor will be the US with an additional $80bn being spent between 2021 and 2024 – equivalent to 48% of global ad spend growth over the period.

CTV accelerates migration from linear to digital content

• A growing disparity in advertising costs is likely to drive further shifts, with the cost of TV rising 11% in 2022, compared to 4% for out-of-home (OOH), 3% for digital display, 2% for radio and zero for print.

• Online video ad spend is set to increase from $62bn in 2021 to $91bn in 2024. At the same time, linear television ad spend will rise from $171bn to $178bn.

• Jonathan Barnard, head of forecasting at Zenith, said: “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. Over the next three years, we expect the ad market to achieve its highest rate of sustained growth since 2000.”

• Barnard previously predicted a take-off in travel ad spending of 36% in 2022.