Global ad spend to rise by 19% to $762 billion in 2021, says report
By Kasim Bakare
GroupM, one of the world’s largest advertising media company, has released an upgraded report midway through 2021, following its last forecast for 2021 released in December 2020. According to the report, global advertising is now forecast to grow by 19% in 2021 reaching a total of $762 billion in ad spend.
The latest figure represents a level of ad revenue that is 15% higher than 2019, as 2020 only experienced a 3.5% decline on the revised estimates. High growth is also projected to persist for the foreseeable future, according to the report. The new report is an indication that advertising growth for the year is far exceeding previous expectations thanks, in no small part, to the pandemic which has led to a major revision of the global forecast for this year and beyond.
According to the latest report, many of the factors causing this faster growth were in place pre-pandemic, but Covid-19 only served as an accelerant. The factors include; faster than expected expansions of app ecosystems, rapid small business formation activities and the growing role of cross-border media marketplaces, especially involving manufacturers based in China.
According to the forecast, traditional TV network owners are now prioritizing investments in content delivered on streaming services as part of sweeping changes taking root in global advertising . While many of them will offer some ad inventory and capture a share of total TV advertising, those gains will only offset reduced spending on the traditional form of the medium. Consequently, we see faster growth in Connected TV+ advertising (what we previously called “digital extensions of traditional TV”) than previously forecast, but total television advertising will generally be stable or slow-growing.
The report also stated that it expects that global advertising including U.S. political would exceed $1 trillion in 2026, up from $641 billion in 2020 and $522 billion in 2016. Of note, concentration within the industry has increased over this time: in 2020, the top 25 media companies represented 67% of total advertising revenue. That same group of companies accounted for 42% in 2016.
Looking at individual markets, several should see better than 20% growth, including the U.K., Brazil, China and India. Many others will rise by the high teens, including Canada, Australia and the U.S.
Most of the improvement in growth reflected in this update belongs to digital media. The forecast also indicates a 26% growth for all forms of pure-play digital media versus 15% at the time of our December update. The forecast update also revealed potential growth in TV ad spend after a moderate declining spend in recent years. Audio advertising and Out-Of-Home advertising is also expected to experience significant growth, as restrictions to human and vehicular movement are relaxed globally.
Television advertising: Television is now expected to grow by 9.3% in 2021, an improvement from our prior 7.8% expectation.
Beyond this year, we expect low single-digit growth for the broadly defined medium, including what we call Connected TV+ (the document has a sidebar that details how we are defining Connected TV+).
It is also estimated that globally Connected TV+ inventory accounted for $16 billion in media company ad revenue, up by 25% over 2020 levels. We anticipate Connected TV+ ad revenue will grow to $31 billion globally by 2026.
TV’s unique reach advantage is set to erode at a relatively rapid pace in the near term as investments in ad-free or ad-light streaming video services—mostly U.S.-based—dominate the global industry going forward. By spending billions of dollars on content (see our sidebar on Global Streaming Video for more on this).
Audio advertising: Expectations for audio were raised significantly in this update, with a forecast now at 18% growth rather than December’s 8.7% level. However, following 2020’s 27% decline, even with these revisions, we do not expect the medium to return to 2019 levels any time soon.
OOH advertising: Based on the forecast, outdoor advertising should fare well, growing by 19% in 2021. Although the 2021 forecast represents a slightly slower pace of growth than was anticipated in December, 2022 expectations indicates a slightly higher figure than before. Longer-term, OOH is benefiting from growing interest in the medium and is aided by new digital formats that allow for incremental sources of demand to emerge
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