- Global advertising spend will exceed pre-pandemic levels by 6% this year
- Digital advertising will account for 58% of market share in 2021, compared with 48% in 2019
- The average cost of TV advertising will rise by 5% this year, while TV ad spend will grow by just 1%
- The United States alone will account for 47% of global advertising spend this year
According to the latest report from media agency Zenith Advertising Expenditure Forecasts, global advertising spend will rise by 11.2% in 2021, driven by exceptional demand for performance-led e-commerce advertising and brand advertising focused on online video. Global advertising spend will total $669bn this year, $40bn more than was spent before the pandemic in 2019.
According to Zenith's experts, growth in global advertising spend will be sustained over the medium term, with forecast growth of 6.9% in 2022 and 5.6% in 2023.
Ad spend growth forecast for the Polish market
2021 brings the expected unfreezing of advertising spend on the Polish market. Estimated advertising market growth of 8.5% will allow it to make up virtually all of the losses caused by the coronavirus pandemic in 2020. The difference compared with spending in 2019 will be around PLN 18m (i.e. below 1%).
The situation in individual media is varied, however. The undisputed growth leader is the internet, whose growth compared with 2020 will exceed 12%, while compared with 2019 this medium will gain more than 17.5%.
According to forecasts by media agency Zenith, this growth in the internet will translate into a 42.6% share of the advertising pie for this medium. This is another year in which the internet is approaching becoming the largest advertising medium on the Polish market.
Growth compared with 2020 spending is also recorded by TV (+6.8%), radio (+5.7%), as well as outdoor (+6.5%) and cinema (+30.1%).
Global ad spend growth forecast
Digital advertising dominates worldwide
The coronavirus pandemic accelerated the structural shift in the economy from traditional sales to e-commerce, prompting more consumers than ever to search for products and make purchases online. As a result, brands became more willing to form partnerships with retailers, focusing on direct-to-consumer operations and using performance marketing-based advertising – mainly in social media and paid search – to guide consumers effectively along the purchasing path. Zenith forecasts that social media advertising will grow by 25% this year and reach $137bn, overtaking paid search for the first time, whose value will reach $135bn (up 19%).
Online video and e-commerce on the rise
A large share of advertising spend in 2021 consists of investment by small businesses that had to move quickly into e-commerce to survive successive lockdowns. Budgets they previously allocated to retailers to secure space on store shelves have now been redirected to display and paid search ads on their websites. The shift towards e-commerce is expected to slow as coronavirus restrictions are lifted and economies reopen, but this trend will not be reversed. Zenith forecasts that e-commerce will continue to dominate in terms of advertising revenue growth, driving 13% growth in social media and 12% growth in paid search in 2022.
Online video and e-commerce drive global advertising spend
After a one-off jump in viewership in 2020, we are again seeing a decline in traditional television audiences, caused by migration towards digital channels. The growing popularity of online video resulting from this trend is not only a way to maintain reach during the decline in TV viewership, but also an effective form of brand communication in itself. However, the popularity of subscription-based video on demand has limited the supply of high-quality online video available to advertisers. Zenith forecasts that online video advertising will be the fastest-growing digital channel in 2021, growing by 26% to reach $63bn.
"Online video is still transforming, driven by the growth of streaming services and smart TVs" – said Benoit Cacheux, Global Chief Digital Officer at Zenith. "Its continued evolution requires a radical rethink of how to build an optimal, screen-neutral reach model. Bringing new data sources into TV campaign planning also creates further opportunities for better synchronisation of TV and video planning."
Social media and online video have overtaken traditional static display advertising, which is forecast to shrink by 15% this year, while online will grow by only 4%. Zenith forecasts that the value of digital advertising will grow by 19% in 2021, and its share of total advertising spend will reach 58%, compared with 48% in 2019 and 54% in 2020.
Most other media will record growth this year compared with 2020, when we saw a 16% decline in advertising spend in traditional media. Cinema and out-of-home advertising were hit hardest by COVID-19 restrictions, falling by 72% and 28% respectively, and their growth will be fastest in 2021, when spending will rise by 116% and 16% respectively. Radio advertising, which fell by 22% in 2020, is set to grow by 4% in 2021, while television advertising spend, which fell by 8% in 2020, is forecast to grow by 1% in 2021. Print will continue its long decline, now in its 14th consecutive year, with an 8% drop in advertising spend in 2021. In 2023, advertising spend across all these media will still be below 2019 levels, although cinema and out-of-home advertising will recover almost all their losses.
Limited supply and rising demand drive media price inflation
Media price inflation
This year's sharp rise in advertising spend, combined with the continued migration of audiences from traditional to digital channels, is contributing to a significant increase in media prices, especially in television. The cost of TV advertising has risen by an average of 5% this year, although there is wide variation between markets and audiences. TV spending rose by 1%, with a consistent decline in reach. Growth in digital media, meanwhile, is driven mainly by rising viewership and broader monetisation, with inflation in online video averaging 7%, while in social media it remains unchanged, compared with their respective 26% and 25% growth in advertising spend.
Almost half of all new advertising spend is driven by the United States
The role of the United States in growth
According to media agency Zenith, all regions will record solid growth in advertising spend in 2021, from 9% in Asia-Pacific to 15% in the Middle East and North Africa, which are recovering from the largest decline in 2020, of 21%. The strongest base growth since 2019 is in North America, which is forecast to grow by 13% this year, despite having contracted by only 1% last year. Growth in North America is driven by the very rapid pace of digital transformation in its industries, as well as strong investment in connected TV and ad-funded video on demand.
The United States will make by far the largest contribution to global advertising spend growth in 2021, accounting for 46% of the $67bn by which the global advertising market will grow this year, followed by China with 11% and Japan and the United Kingdom, each contributing 6%.
"After a very difficult last year, the advertising market is experiencing a positive recovery, meaning this year's spending will even exceed 2019 levels" – said Jonathan Barnard, Head of Forecasting at Zenith. "Digital advertising is becoming an increasingly effective brand growth tool, as media and commerce continue to move online, attracting greater investment from both large brands and small businesses."
Summary
Global advertising spend will rise by 11.2% in 2021, reaching $669bn and exceeding pre-pandemic levels by $40bn. The growth engine is e-commerce and online video, which are gaining at the expense of traditional media. Social media advertising ($137bn) will overtake paid search ($135bn) for the first time. Online video will grow by 26%, to $63bn.
On the Polish market, spending will rise by 8.5%, and the internet will gain more than 12% year on year, reaching a 42.6% share of the advertising pie. The United States accounts for 46% of global market growth this year.
