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GroupM ad revenue 2022 report: ‘surprising growth’ and ‘probably’ no pandemic impact

GroupM’s predictions for 2022 suggest the ad market will grow at a significant pace next year

WPP’s GroupM has released its 2022 forecast predicting global media owner ad revenues as we (hopefully) transition out of a pandemic. Brian Wieser, its global president of business intelligence, was “surprised” by the pace of growth and believes any further pandemic developments “probably won‘t impact the advertising market at all.”

The report said that 2021 global advertising was up 37.5% (excluding US political advertising), with a strong rally in the final quarter. GroupM had to double its prediction in September from 19.2%. Digital represented 64% of global advertising. In the world’s biggest ad markets it hit 60% (US), 78% (UK) and 87% (China).

The Drum picks out four major trends outlined by the report.

Faster-than-anticipated growth

GroupM has upped its ad revenue projections much more than previously anticipated, driven primarily by growth in the US, UK and China. This wasn’t exactly what was expected in March 2020.

Wieser says: “The economy was at its worst since at least the Great Depression ... you’d have thought you’d have the worst ad markets since then too but the ad market was not that bad.

“Most markets around the world have raised their forecasts for 2021 and 2022 in terms of how fast they would think the advertising market is growing.

He is also largely unconcerned by supply chain issues (much of which is driven by competition at the production level and not lower consumer demand). And in most markets, inflation will have “no risk to the ad marketing in terms of friction to the economy.”

It won’t be enough to substantially hinder day-to-day commerce, he says.

Digital continues to swell

Digital spend crossed the Rubicon in 2021. Ad spend crossed the 50% level in the UK in the first half of 2021, for example (note that ad spend differs from the media owner’s ad revenue the GroupM report uses).

Digital advertising will account for 64.4% of total global advertising revenue in 2021, up from 60.5% in 2020 and 52.1% in 2019. Outside of China, Alphabet, Meta and Amazon will be the world’s largest sellers of advertising and account for between 80-90% of the global digital total, and close to 50% of all advertising revenue in general.

It found that 64% of the world’s ad revenue goes to digital media and 21% goes to TV, but business plans differ hugely by scale. Smaller brands are more likely to be all-in on digital and larger ones are more likely to increase spend in TV.

Privacy worries didn’t reduce spend

Wieser said that some feared that privacy-centric changes, such as the death of the third-party cookie and Apple’s ATT, would reduce spend in digital advertising. However, there’s been no data to support that.

“Our view has always been that marketers look for the ‘least bad’ available data at any given time, recognizing that no data is ever perfect. With that constraint, they continually adjust spending and budget allocations to satisfy goals as best as they can.”

In short, there’s no dramatic exodus or stoppage of spend. He says Apple’s ATT in particular hasn’t impacted at this level yet. “You don‘t really see the impact ... [the changes] were only ever going to cause a shift of spending, not a decline or increase.”

TV’s return

At an industry level, he points out that television is the next most important medium after digital. Globally it will grow by 11.7% in 2021, but won’t return to 2019 levels until 2023. After all, in 2020 it lost 13.7% of spend.

In the long term, he sees the largest advertisers that historically dominate the medium “continue to incrementally shift their spending elsewhere.”

Total TV advertising should amount to $171bn in 2022. Approximately $17bn will go to connected TV (CTV), showing the infancy of the burgeoning digital TV medium. It will double to $33bn by 2026. How much of that spend will come from TV and how much will come from the wider digital ecosystem? That’s the big question.

The report reminds us that a lot of CTV space remains ad-free, but as long as it continues to seize attention, TV will lose reach and will be “generally less attractive to many marketers.”

A helpful comparison in trying to determine ad revenues is by benchmarking GDPs and economic growth – it’s instructive, but not as Wieser says “rigid.”

“To look at the correlation in some markets, if you do a quick R squared between growth in advertising in China and its economic activity, the R squared is zero, meaning there‘s no correlation. In the US, there are still reasonably strong correlations in the UK, but it’s not as strong as you’d think.”

In short, 2021 was the year that GroupM had to double its ad revenue projections ahead of the festive period. Wieser admits fearing the forecasts were too aggressive. “Nope,” he laughed – a hint of good news for advertisers and media owners alike that ought to hold regardless of what the pandemic brings up next.

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