Global ad spend will grow 11.2% in 2021, driven by exceptional demand for performance-based ecommerce advertising and online video brand advertising, according to Zenith’s latest ad spend forecast, released today.
Ad spend will total $ 669 billion this year, $ 40 billion more than what was invested before the pandemic in 2019. Ad spend growth is expected to remain strong over the medium term, with growth expected to be 6.9% by 2022 and 5.6% by 2023.
The coronavirus pandemic has accelerated structural change in the economy, from physical sales to ecommerce, leading more consumers than ever to try and shop online. Brands have responded by partnering with retailers and creating new direct-to-consumer operations, using performance-based advertising – primarily on social media and paid search – to guide consumers down the road to purchase.
Zenith expects advertising on social media to expand 25% this year to reach $ 137 billion, surpassing paid search in scale for the first time. Paid search will increase by 19% to reach 135,000 million dollars.
Much of all this means new money for the advertising market, coming from small companies that have had to adapt quickly to ecommerce to survive the confinements, with budgets that brands would have assigned to retailers, previously, to ensure the physical space in their shelves, and now they are investing in display and search ads on retailer websites.
The shift to e-commerce will slow as coronavirus restrictions are lifted and economies reopen, but it will not back down. Zenith believes that ecommerce will continue to generate progressive revenue in the advertising market, driving 13% growth in social media and 12% growth in search in 2022. Audiences continue to migrate online and online video viewing is growing rapidly.
Even as traditional television viewership rates decline again, after an exceptional boom when lockdowns began in 2020. Advertisers value online video as a means of maintaining reach while television loses, but it is an effective way. brand communication in its own right. Demand is high, although the popularity of video on demand, funded through subscriptions, has helped limit the supply of high-quality online video available to advertisers.
Zenith expects online video advertising to be the fastest growing digital channel in 2021, increasing by around 26% to $ 63 billion. “The online video landscape continues to transform, driven by the growth of streaming services and connected television,” said Benoit Cacheux, Zenith’s Global Chief Digital Officer. “Its continued evolution requires a radical rethinking of how to build the optimal on-screen range-neutral model.
Incorporating new data sources into TV planning also creates more opportunities to further synchronize TV and video planning.” Social media and online video have eclipsed traditional static viewing, which is forecast to decline 15% this year, while online classifieds grow just 4%. Overall, Zenith expects digital advertising to grow 19% in 2021 and increase its share of total ad spend by 58%, up from 48% in 2019 and 54% in 2020.
Most of the rest of the media are growing this year, as investment recovers from the 16% drop in advertising investment in traditional media in 2020. Film and abroad were the most affected by the restrictions related to COVID, reducing by 72% and 28% respectively, and will enjoy a faster recovery in 2021, with respective growth rates of 116% and 16%.
Radio advertising, which contracted 22% in 2020, is expected to grow 4% in 2021, while television, which fell 8% in 2020, will grow 1% in 2021. Print media will continue to decline, for the fourteenth consecutive year, with an 8% drop in advertising investment in 2021. In 2023, advertising investment in all these media will continue to be below 2019 levels,
Limited supply and growing demand are fueling media inflation
The rapid recovery in ad spend this year, along with the continued migration of audiences from traditional to digital channels, is driving substantial increases in media prices, particularly on television. The cost of television advertising has increased by 5% on average this year, although the variation between markets and audiences is wide. Investment in television has increased by 1%, so the volume of audiences reached worldwide is shrinking.
The growth of digital media, on the other hand, is mainly driven by the increase in audiences and a more extensive monetization, with an average inflation of online video of 7% and social networks practically unchanged,
The US will provide almost half of all new dollars invested in advertising
All regions will enjoy strong ad spend growth in 2021, ranging from 9% in Asia Pacific to 15% in the Middle East and North Africa, recovering from a steeper decline in 2020 , 21%. The strongest underlying growth, since 2019, is occurring in North America, as it is forecast to grow around 13% this year, despite contracting just 1% last year.
Growth in North America is being driven by digital transformation in its industries, which is proceeding at a very rapid pace, as well as heavy investment in ad-supported connected television and video on demand. The US will be by far the largest contributor to global growth in 2021, accounting for 46% of the additional $ 67 billion in the global advertising market this year, followed by China, with 11%, and Japan and the United Kingdom, with 6% each.
“After a very difficult year, the advertising market is enjoying a rapid and comprehensive recovery and will end the year well above the level reached in 2019,” said Jonathan Barnard, Head of Forecasting at Zenith. “Digital advertising is becoming the most effective tool for brand growth as media and commerce continue to migrate online, attracting increased investment from both large brands and small businesses.”