Reports on advertising spend show Australia growing moderately against strong growth globally, driven by US, UK and China markets
Australia’s advertising spend growth is set to continue into 2022, albeit at moderate rates of between 4 to 5 per cent, against a globally recharged media market.
Two new global advertising reports have been released this week from GroupM and Zenith looking at the state of play for advertising, as well as predictions for what’s in store in 2022. Both predict solid increases locally as well as worldwide going into the New Year, off the back of strong gains made in 2021.
In its annual Global end of year forecast, GroupM lifted its 2022 forecasts to address much faster expansion of the advertising industry than previously anticipated and driven by gains across the US, UK and China. The media agency is predicting 9.7 per cent growth globally excluding US political advertising, up from its 8.8 per cent forecast in June.
This contrasts with a final 2021 growth projection of 22.5 per cent, up from 19.2 per cent previously. Collectively, GroupM said TV, digital, audio, newspapers and magazines, cinema and out-of-home media would account for US$766 billion in ad revenue in 2021, and tip $1 trillion in 2025 based on new estimates.
Driving growth is a combination of small businesses allocating greater resources to nationally oriented digital advertising, China-based marketers taking advantage of low-cost international shipping and global digital platforms to reach a wider array of consumers, and app developers and ‘digital endemic’ businesses focusing on advertising-driven top-line revenue growth, GroupM stated.
In Australia, ad spend is expected to grow 6.2 per cent next year and then between 4 to 5 per cent annually and on average over the next five years. It’s a similar forecast to that for France, Germany and the US.
“As we come to the end of 2021, we can reflect on a year of incredibly positive growth, +21.5 per cent, for the overall market,” GroupM Australia chief investment officer, Seb Rennie, commented. “Pure digital and digital extensions of traditional media have seen the largest growth, reflecting the changing media consumption habits of consumers, the diversification and growth of ecommerce channels and the growth of business rooted in the Internet economy.
“While not reaching the heights of the US, China and UK who are leading the global growth; 2022 will bring the Australian media sector more moderate, but positive, growth at 6.2 per cent with a continuation of digital trends from 2021 and the post lockdown release of pent-up demand for out-of-home and cinema.”
The GroupM report noted many underlying trends appeared disproportionately concentrated in the US, the UK and China, which together account for about 70 per cent of all industry growth. This is despite making up about 60 per cent of the total market.
Within the mix, digital advertising is set to account for 64.4 per cent of global advertising in 2021, up from 60.5 per cent in 2020. GroupM predicted digital advertising would likely end 2021 by growing 30.5 per cent, 4.5 per cent higher than June predictions.
In total, digital advertising should be worth US$537 billion in its broadest form. Within this, Alphabet, Meta and Amazon account for up to 90 per cent of the global total.
Television advertising is forecast to grow 11.7 per cent this year, again up on June’s 9.3 per cent predictions. However, given 2020’s decline of 13.7 per cent, GroupM said the industry is not expected to return to 2019 levels until 2023, with 1-2 per cent growth anticipated through to 2026.
Overall, GroupM expected connected TV to account for about 10 per cent of total TV advertising in 2022, or US$17 billion of a total of US $171 billion, increasing to $33bn by 2026.
Across other categories, audio advertising is expected to hit 15.6 per cent growth rate in 2021. It’s then expected to grow 6.4 per cent in 2022 before returning to largely flat growth rates in subsequent years. Similarly, outdoor advertising is expected to grow 17.1 per cent in 2021 and 14.9 per cent in 2022. Again, GroupM expected a reversion to historical trends of mid-single digit growth long-term.
“In the audio category, digital streaming services and podcasting-related revenues have become increasingly important parts of media plans and are critical to helping the industry avoid decline given its relatively unfavourable mix of smaller, locally constrained advertisers,” the report stated. “Meanwhile, in outdoor, the growing availability of digital screens is helping expand the capacity of the industry, while greater numbers of marketers, such as those in the technology and luxury markets, look to capitalise on outdoor’s unique capacity to reach individuals in the world’s largest cities.”
Zenith’s figures show digital, social driving growth
Zenith’s media predictions proved to be on a similar plane locally as well as globally. The media agency expected Australia’s ad spend to grow 5 per cent in 2022 against global ad spend growth predictions of 9.1 per cent.
The Advertising Expenditure Forecasts report also anticipated global ad spend growth in 2021 to hit 15.6 per cent, or US$705 billion, up from $634bn in 2019. Globally, Zenith predicts ad spend will hit $873bn by 2024 at rates of 5.7 per cent growth in 2023 and 7.4 per cent in 2024.
Closer to home, Zenith national head of investment, Elizabeth Baker, said Australia was on track for 18 per cent advertising spend growth in 2021.
“Digital and TV ad spend recovery has been rapid, and recent lockdown restrictions in Australia has not appeared to dampen growth,” she said, noting the Tokyo Olympics as a major contributor. “Consumer confidence is relatively stable, despite the slight drop over the last weekend of November, following omicron news and international border closure announcements. However, retail outlook appears to be healthy with major household item purchase intent remaining strong.”
Digital advertising was highlighted as stronger in the second half of this year than previously expected, with Zenith estimating this category of spend will grow by 25 per cent year-on-year in 2021, or 21 per cent for calendar 2021. This contrasts with the 19 per cent estimated in previous forecasts published in July.
Going into 2022, Baker said premium sporting events such as The Ashes, Winter Olympics and Commonwealth Games, along with a Federal Election in Q2 2022 as well as several state elections should facilitate ad spend stability, especially across TV and digital.
Overall, Australian digital ad spend should tip $11.2bn in 2021. Zenith national head of digital and data, Joshua Lee, added double-digit growth across all channels and online retail sales growing by 25 per cent should see the retail category continue to thrive as brands invest in digital transformation.
Globally, Zenith expected digital transformation to slow down but not go into reverse, as the pandemic eases in 2022 and beyond. It’s forecasted 14 per cent growth in global digital ad spend in 2022, up from the previous 10 per cent, followed by 9 per cent growth in 2023 and 10 per cent in 2024.
Digital advertising is tipped to exceed 60 per cent of global ad spend by Zenith for the first time in 2022, reaching 61.5 per cent of total expenditure, and growing share to 65.1 per cent by 2024. Another growing channel highlighted by Zenith was retailer media. According to its figures, advertising surged from 24 per cent growth in 2019 to 53 per cent in 2020 and 47 per cent in 2021 (US$77bn). This is equivalent to the sums spent on newspaper, magazine, radio and cinema advertising combined, and accounts for 20 per cent of all expenditure on digital display and paid search advertising.
By 2024, Zenith predicted retailer media ad spend would reach US$143bn, representing 27 per cent of display and search.
But it’s social media Zenith sees as the fastest-growing channel between 2021 and 2024, with an average annual growth rate of 14.8 per cent. This equates to US$177bn in ad spend in 2022, overtaking TV at $174bn, and $225bn by 2024.
Paid search, according to Zenith, will grow by 9.8 per cent a year, primarily driven by retailer media, while out-of-home is expected to enjoy 7.4 per cent annual growth. Radio and television will grow marginally, by 2.2 per cent and 1.4 per cent respectively, while print declines by 4.7 per cent.
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