Global ad spend will grow by 5.6% to $620 billion in 2021: Report

Hemani Sheth Mumbai | Updated on December 14, 2020

Zenith forecasts that digital advertising will contribute 58% of the total global ad spend by 2023

The global ad spend will witness a jump of 5.6 per cent in 2021, according to a report by Zenith’s Advertising Expenditure Forecasts.

According to the report, the global ad spend will grow to $620 billion in 2021, “boosted by the favourable comparison with 2020, as well as the delayed Summer Olympics and UEFA Euro football tournament.”

Although the growth is a little behind than the estimated growth at 5.8 per cent forecast in July, it is a significant improvement considering the slump caused by the Covid-19 pandemic this year.

The global ad market is now forecast to shrink by 7.5 per cent to $587 billion across 2020, as per the report. In 2022, ad spend is predicted to increase by 5.2 per cent to reach $652 billion, an increase of $18 billion as compared to 2019.

“These forecasts assume that the global economy will start a sustained recovery as Covid-19 vaccines are introduced in 2021, and are subject to the wide uncertainty over how rapid this recovery will be,” Zenith said.

Spending to increase

Global digital adspend, however, is expected to rise by 1.4 per cent in 2020. The share of digital ad spend in the total ad spend will increase to 52 per cent, up from 48 per cent in 2019.

“The pandemic has forced brands to step up their digital transformation as e-commerce has proved a vital tool for maintaining relationships with existing customers, mitigating the loss of in-store sales, and even finding new customers,” the report said.

As per the Euromonitor International forecasts, e-commerce sales will increase by 25 per cent in 2020 as brands increase spending on digital media to promote and drive traffic to their own e-commerce operations and to retailer partners.

Retailer media

The surge in e-commerce in 2020 has also fuelled the rapid growth in demand for retailer media. Retailer media is defined as “display or search ads that appear on retailer platforms and direct users to products available for purchase there.”

Advertisers spend $51 billion on retailer media in 2020, up by 46 per cent year-on-year from 2019 as per Zenith’s estimates.

“Retail platforms are powering their growth by putting pressure on brand margins. Their focus on bottom out price wars, and enhanced consumer experiences, benefit consumers while brands bear the cost,” said Ali Nehme, Global Chief Commerce Officer, Publicis Groupe.

“In this scenario, brands must flex their own power, by selecting retailer partners who offer demonstrable value through transparent data and measurement, as well as the ability to deliver the consumers who will drive much needed category growth,” Nehme added.

Zenith forecasts that digital advertising will contribute 58 per cent of the total global ad spend by 2023. “Adspend is forecast to bounce back to 2019 levels in 2021 in both the Asia Pacific and Central & Eastern Europe,” as per the report.

With the rapid technology adoption, the demand for ad-funded video on demand (AVOD) is expected to grow over the years.

“It will counter-balance the loss of audiences to SVOD (subscription video-on-demand) platforms and help fuel an average of 8.4 per cent annual growth in online video adspend between 2020 and 2023,” the report said.

“Now that it offers mass reach in key markets, it’s the right time for brands to invest in connected TV,” said Christian Lee, Global Managing Director at Zenith. “Brands should use connected TV for both branding and performance, exploiting its high ad recall and full targeting and tracking capabilities to drive awareness and sales conversions at the same time.”

Published on December 14, 2020

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