Global media adspend on track for 8% growth
Global advertising expenditure is forecast to grow 8.0% in 2022, according to Zenith’s latest Advertising Expenditure Forecasts report. This represents a minor downgrade from the 9.1% growth rate Zenith published in December 2021. Growth will be supported by the Winter Olympics, mid-term US elections and soccer World Cup, which for the first time will take place in the most advertising-intensive period of the year in the run-up to Christmas. Faced with this tough comparison, growth will slow to 5.4% in 2023, before the Summer Olympics and US presidential elections help boost it to 7.6% in 2024.
Zenith’s forecasts for North America, MENA and Western Europe in 2022 are unchanged at 12%, 7% and 6% growth respectively. Latin America was downgraded slightly from 9% to 8%, but Asia Pacific was upgraded from 6% to 7%, thanks to a very strong performance from India. Severe disruption in Russia and its closest trading partners after the invasion of Ukraine will lead to a 26% decline in adspend in Central & Eastern Europe, even though most other markets in the region will continue to grow.
Adspend has remained on track despite the macroeconomic headwinds that emerged this year. High inflation, concentrated in essentials like heating, petrol, and food, is forcing consumers to reprioritise their spending, particularly the less well-off, and has led to a drop in consumer confidence. But for now, consumer spending continues to grow, as consumers demonstrate their strong appetite for the travel and entertainment experiences that were denied to them over the pandemic. Business confidence is generally high, and corporate investment is rising, and there is little evidence of widespread cost-cutting.
The sustained growth in demand from advertisers is pushing up media inflation, particularly in television, where the supply of audiences is falling steadily as viewers switch to alternatives. Price rises vary widely for different audiences in different countries, but the global average cost of television advertising across all audiences is expected to rise by 11%-13% this year. Online video prices are expected to increase by about 7%, although in this case the supply of audiences is rising. Other digital channels where supply is climbing and volumes are flexible are inflating only modestly, with 3% average price rises forecast for social media and other digital displays. Out-of-home and radio prices will go up about 4% this year, while print prices will remain stable, because demand for advertising in printed publications is falling as rapidly as readership.
“In a world where trading is becoming dominated by auctions, competitive advantage is achieved not by scale, but by data,” said Ben Lukawski, Global Chief Strategy Officer, Zenith. “Inflation will hit cheap reach buyers hard, but brands that make smart use of their data will manage costs and grow their business at the same time.”
Earlier in January, Dentsu Global ad spend report anticipated US$745bn would be spent globally. When compared to previous global financial and advertising crises, notably the financial crash of 2008, this rebound would be almost three times greater.
Linear TV adspend increased by 7.9% in 2021, the highest rate since 2010, when the market rebounded from the global financial crisis. In 2022, Dentsu forecast linear TV adspend to grow by 3.8% to reach US$198 billion. Unlike digital and despite staying in high demand, Dentsu is seeing linear TV share of spend on the decline as Connected TV and Video on Demand (VOD) grow.
Out-of-Home (OOH) and cinema will both see encouraging double-digit growth in 2022 (respectively 12.8% and 23.4%), with OOH even exceeding 2019 pre-pandemic spend levels. Radio too is forecast to grow, yet at a slower pace (2.0%). As with previous predictions, ad spend in newspapers and magazines will continue to decline.
Looking further ahead, global ad spend is predicted to grow by 4.6% in 2023 and 5.8% in 2024 – in line with growth before the pandemic (4.1% in 2019). Digital is forecast to increase its share of spend domination, approaching 60% in 2024 (59.4%). Of course, many factors contributing to the uncertain economic outlook could influence the predictions, from the evolution of the pandemic to supply chain issues, and dentsu recommends the industry keep a close eye on key economic indicators.
Until 2020, when the coronavirus put a halt on many industries, the spending on advertising worldwide has been increasing steadily. Luckily, the market saw healthy growth in 2021 and is expected to continue on the path and surpass one trillion U.S. dollars in 2026. North America is the region that invests most in advertising, however, Asia Pacific has been on its heels for quite some time, and Western Europe closes the top three. Middle East and Africa as well as Central and Eastern Europe spend the least; however, they can boast the highest growth in 2022.
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