WARC’s latest Global Advertising Trends report: Ad Investment 2021/22 – The Rate of Recovery is now available. Following the analysis of ad spend across 100 markets, WARC has upgraded its annual forecasts as the global ad market rebounds strongly from the Covid-19 downturn of last year.
Global advertising spend is on course for 12.6% growth this year to reach US$ 665bn, an upgrade from 6.7% initially projected. Further growth of 8.2%, is forecast for 2022, by when the global advertising market will be worth more than US$ 700bn.
New quarterly research from 100 markets by WARC finds that advertising spend in Q2 2021 rose 23.6% to a total of US$157.6bn – a new high for a second quarter period and the strongest rise in over a decade.
Growth in the second quarter was driven mostly by online formats, which collectively saw spend rise by 31.2% versus the previous year. e-commerce (+59.5%) and search (+50.6%) were star performers, though offline media – most notably linear TV (+11.5%) – also fared well.
The second quarter rise in global ad trade followed on from 12.5% growth in the first quarter. Consequently, at US$311.5bn, global ad investment was 17.8% higher during the first six months of the year than during the same period in 2020.
Covid-19 accelerated a digital shift in marketing
New research lays bare the scale of the 2020 ad recession. While total spend fell by 5.4% – approximately half the rate initially estimated – spend on offline media such as print, radio, TV and cinema fell by a fifth, or US$63bn, equating to the worst downturn for this sector in WARC’s 40 years of market monitoring.
Spend online, however, rose by 9.4% ($29.2bn) last year, buoyed by rising e-commerce (+27.4%), social media (+18.3%) and online video (+15.9%) investment.
Online media gained 10 percentage points in budget allocation last year in the automotive and financial categories, a rate of increase that was double the pre-pandemic average. All product sectors are allocating more of their ad budget to online formats than before the pandemic.
Online formats are also leading growth in 2021, with WARC forecasting spend on e-commerce advertising to rise 35.2% this year, mostly to the benefit of Amazon. Brand spend on search – where Google is the largest player – is set to rise by over a quarter (26.2%) this year, while online video spend is expected to be up by 17.7% and social media by 13.1% this year. All of these formats are expected to record growth in 2022, too.
James McDonald, Managing Editor, WARC Data, and author of the report said, ‘New quarterly research, collated from 100 markets worldwide, shows for the first time the true extent of the digital shift in response to the coronavirus outbreak last year. Growth in online adspend has typically tracked some 20 percentage points ahead of offline media, but in the final quarter of 2020 this leapt to a remarkable 41 points – an absolute difference of $41bn.
‘Investment in offline media fell by $63bn worldwide in 2020, marking the worst year in living memory for the majority of media owners. All media are forecast to record growth this year, with most sustaining this into 2022. Yet, as has been seen before, it is the online platforms that are set to benefit most from the ad market’s recovery.’
Global, Advertising investment forecast chart.
Trends by media and format 2021/2022
Linear TV: spend is projected to grow 7.1% – or $11.1bn – to $168.1bn this year, equal to a quarter (25.3%) of the global ad market. Investment is expected to rise by a further 2.7% in 2022, though this means only 60% of 2020’s losses will be recovered by 2022.
Out-of-home: double-digit growth is expected in both 2021 (17.4%) and 2022 (11.2%) as the medium recovers from the lowest level of investment in over a decade. This year will see $34.9bn being spent and this is set to rise to $38.8bn next year, though this still leaves the market $2.6bn short from 2019’s level of investment.
Cinema: spend was heavily curtailed in 2020 and a strong recovery looks underway. Cinema is forecast to be the fastest growing medium in both 2021 (149.9%) and 2022 (26.9%), taking total investment to $3.4bn next year.
Linear radio: investment in radio ads is projected to increase by double-digits (10.4%) – or $2.5bn – this year. However, spend in 2022 will largely be flat (0.8%) to a total of $26.6bn.
Newspapers: advertising spend on print newspapers will rise by 4.8% this year, the first growth recorded in a decade. This puts the total at $29.6bn, before a mild decline of 1.0% is projected for 2022.
Magazines: investment is expected to rise by a modest 2.5% this year before falling into decline of 4.3% next year. This means magazine brands in 2022 will have recovered just 5% of 2020’s lost advertising revenue.
Social media: social formats, combined, were among the strongest performers in 2020, recording total growth of 18.3% to a total of $99.2bn. Social spend is set to rise by 13.1% in 2021 and a further 10.1% in 2022, by when the market will be worth $123.5bn – approaching a fifth (17.2%) of all advertising spend worldwide.
Online video: online video spend rose 15.9% to reach $54.9bn in 2020. Growth is forecast to accelerate to 17.7% this year, with a rise of 15.9% predicted in 2022.
E-commerce: brand spend on e-commerce platforms leapt 27.4% last year as shoppers migrated online in response to social distancing guidelines. Advertising growth in this sector is now expected to accelerate to over a third (35.2%) in 2021, pushing the market’s value to a total of US$ 85.2bn. Further growth, of 11.4%, is forecast next year.
Paid search: the search market recorded its first decline on record during the second quarter of 2020, though a strong finish to the year meant investment was up by 5.4% during 2020 as a whole. Rapid growth, of 26.2%, is forecast for 2021; the search market grew by a record 50.6% during Q2 2021 alone. Growth will then ease back to 4.3% in 2022, by when the market will be worth $151.9bn, 21.1% of all ad spend.
Global, Advertising investment forecast by medium chart.
Trends by region 2021/2022
Africa: spend is projected to rise by 9.7% this year to reach $6.2bn, with further growth of 7.3% expected for 2022.
North America: spend in the largest region (with a 38% share of all investment) is expected to rise by 12.8% this year to reach $254.9bn, driven by a 12.7% increase to $242.5bn in the US and a 14.5% rise to $12.3bn in Canada. North America will see spend rise 8.4% next year to reach a new high of $276.3bn.
Asia Pacific: regional advertising investment is projected to increase by 12.8% this year to top $200bn for the first time. This will be driven by the Chinese ad market, which is expected to grow by 16.3% to top $100bn for the first time. Japan (+8.9% to $44.4bn) and Australia (+11.6% to $12.2bn) are also set for full recoveries this year. India, however, will see strong growth (+16.1% to $8.2bn) but 2021 investment will not fully recover 2020’s losses.
Europe: spend in Europe is expected to rise by 12.1% this year to reach $154.6bn, with 6.5% growth projected for 2022. Spain (+16.6% to $7.6bn) and the UK (+15.5% to $33.3bn) will be the quickest growing major markets this year. Russia (+14.4% to $9.3bn), Italy (+11.9% to $9.9bn), France (+11.4% to $15.7bn) and Germany (+9.7% to $26.6bn) will also see strong growth, though Spain and Russia will not recover all of 2020’s losses this year.
Latin America: ad investment is projected to rise by double-digits in both 2021 (16.9%) and 2022 (11.1%) to reach $24.8bn next year. However, this is still down 7.8% from 2019 levels owing to a steep contraction in 2020, particularly in the region’s largest market – Brazilian adspend (in US dollar terms) fell by more than a third in 2020, with 22.3% growth projected for this year and a 12.4% rise expected in 2022 (to reach $13.2bn).
Middle East: following a one-quarter decline in spend last year, regional advertising growth will be 6.2% this year and will then accelerate to 15.1% in 2022. This puts total investment at $13.2bn next year, $1.2bn less than the pre-pandemic level in 2019.
Trends by product category (Five largest in 2022)
Telecoms and utilities: the quickest growing category pre-pandemic shows no sign of slowing as advertising spend is expected to grow almost twice as quick as the wider ad market in 2021 and 2022. Total investment will increase by 21.1% this year and then 11.2% next year to reach a projected $95bn, extending telecoms and utilities’ lead as the largest advertising category.
Media and publishing: advertising spend from media brands is expected to top $70bn worldwide this year for the first time, growing 18.3% (the third quickest rate) and easily surpassing the mild decline last year. Further growth of 6.9% is expected in 2022, with online media expected to take an almost three-quarters share of total investment, up from one-quarter in 2013.
Business and industrial: investment from business advertisers is forecast to rise by double-digits (10.6%) this year to equal $69.3bn. Growth of 7.7% is expected in 2022, the third quickest rate that year, which will take total ad spend to $74.6bn and within touching distance of overtaking media and publishing as the second largest category.
Retail: a cut to advertising budgets of $6.2bn last year will only just be recovered this year – investment is projected to rise by 11.1% to reach $66.2 in 2021, just 0.6% higher than pre-pandemic spend in 2019. WARC Data’s analysis of company reports also finds that while some retailers were modest in their ad cuts last year, like Amazon (-0.9%) and Best Buy (-2.5%), others were more severe: Walmart (-13.5%), Carrefour (-22.8%) and TJX (-34.5%) cut their ad spend by double-digits in 2020.
Financial services: steep cuts to automotive advertising last year has pushed financial services into the top five largest categories. Total investment is projected to rise by 17.9% in 2021 and this will push spend above $50bn for the first time. Additional growth of 7.0% is expected next year, furthering its lead over sixth placed automotive.
Global, Advertising investment forecast by product category chart.
A sample report of WARC’s Global Ad Trends: Ad Investment 2021/22 is available here.