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- WARC data reveals the advertising market grew to $771 billion
DUBAI: New advertising spend forecasts for 100 markets worldwide show that the global ad market grew 23.8 percent in 2021 to reach $771 billion and is on course to reach a value of $1 trillion in 2025, according to marketing intelligence firm WARC.
This year marks the strongest growth in the last four decades, with advertising investment forecasted to rise 12.5 percent in 2022 and 8.3 percent in 2023.
Data reveals that more than half of advertising spend is going to just three companies: Alphabet, Meta, and Amazon. According to a recent WARC survey, two out of three marketers who have already committed budgets to Amazon are intending to increase that spend.
Social media platforms are also forecasted to see increased advertising investment with advertising professionals planning to increase spending on TikTok (66 percent), YouTube (61 percent), Instagram (60 percent), and Google (57 percent) next year.
“Despite potential headwinds, market data show that we are currently witnessing a boom in advertising trade like none seen before, led by increased demand for retail media and ancillary publishers such as Google and Instagram, which is now the world’s largest social platform,” said James McDonald, director of data, intelligence and forecasting at WARC.
When it comes to digital media, e-commerce is expected to lead the growth with Amazon on course to amass over $57 billion in advertising revenue by 2023 — a massive 72 percent increase from this year.
Social media was the fastest-growing online sector in 2021 with advertising spend rising by 41.9 percent. Instagram grew to become the largest social media platform in 2021 after overtaking the core Facebook platform for the first time and is forecasted to control over one-third of the global social media market in the next two years. TikTok’s ad revenue increased 51.5 percent this year and is expected to record growth of 75.4 percent in 2022.
Premium online video platforms YouTube and Amazon Prime Video were worth a combined $63.7 billion to advertisers in 2021, up 41.6 percent from a year earlier.
Search advertising continues to grow, making Alphabet the world’s largest media owner and Google the largest individual platform. Google’s advertising revenue rose by 40.6 percent to $146.3 billion this year — taking 79.7 percent of all search spend and 19 percent of all advertising spend worldwide. Google’s growth is set to ease to 14.8 percent in 2022.
With podcasts and music streaming increasing in popularity, advertising spend on online audio rose by one-third to $5.4 billion in 2021, with podcast spend up 50.9 percent and streaming up 28.4 percent. Both formats are expected to continue to grow with the online audio sector’s worth increasing to $8.3 billion by 2023.
With regards to traditional media, advertiser spend on TV grew 5.5 percent this year and is projected to grow by 3.3 percent next year. Linear TV is set to remain larger than premium video services such as YouTube and Amazon Prime Video, though its share of global ad spend will dip below a fifth as broadcaster’s video-on-demand services attract incremental spend.
The out-of-home market recorded a recovery of 21.8 percent this year, but it was not enough to offset the 28.2 percent decline recorded in 2020 as the COVID-19 outbreak first brought the world to a standstill.
The pandemic’s impact was also evident in the cinema advertising sector, as spend heavily declined in 2020 by 71.2 percent. However, this year, spending rebounded to record a rise of 149.9 percent as cinemas opened back up and big movie releases hit the theaters.
Investment in broadcast radio ads rose by 8.4 percent this year and is set to grow by 3.5 percent in 2022 and 1.5 percent in 2023, by when the market will be worth $34.3 billion. This makes it the only legacy medium set to record continuous growth over the forecast period.
Advertising spend on print and online news brands dipped by 4 percent this year, while the magazines market was down 6.6 percent.
“New coronavirus variants, such as omicron, may have a negative impact on our current outlook, and while our base scenario assumes that impact is muted, we will continue to review that position each quarter,” said McDonald.
That said, some companies will remain immune to the effects COVID-19. “Amazon is expected to finish the year with an ad business worth $12 billion more than the start of the outbreak, the newly anointed Meta will be $31 billion wealthier, and Alphabet drew an additional $59 billion from brands before costs,” he added.