Three prominent global ad agencies (Magna, Zenith and GroupM) recently issued their final forecast for the ad marketplace in 2021 and a look at 2022. Forecast were provided for both the U.S. and global markets. In 2021 the ad marketplace was driven by digital media, specifically social, search and video which was more robust than anticipated midyear. While there are several factors to consider, strong ad spending growth is expected to continue in 2022. The U.S. ad market is forecast to exceed $300 billion and the global ad market over $700 billion.
U.S. Ad Spending: According to Magna Global, the U.S. ad market will rebound in 2021 with ad dollars growing year-over-year by an estimated 25%, totaling $284.3 billion.
Driving the growth in ad dollars will be digital "pure play" media which will grow by 35% in 2021 and total $162.4 billion, accounting for 57% of total ad dollars. Among digital segments, search will lead with $98.6 billion, (+39% from 2020) accounting for over one-third of all ad dollars invested in media in 2021. Magna reported social media will generate $58.8 billion in ad spend, increasing by 36% from 2020, one-fifth of all ad dollars spent in 2021 will be allocated to social media.
For 2021, ad spending for all video will come in at $81.9 billion for the year, an increase of 12% from 2020. National broadcast and cable television will generate $39.9 billion in 2021, an increase of 7%. In a non-political year local TV/video ad spending will drop 3% to $19.9 billion. It will be the only video segment forecast with year-over-year declines. On the other hand, led by YouTube and Twitch, pure players (short form video) is forecast to be +47% reaching $16.3 billion. In addition, long form AVOD and OTT/CTV devices is projected for +36%, following a strong year-over-year +24% in 2020. For the year, ad spending for long form AVOD and CTT/OTT will total $5.8 billion, the lowest of any ad supported video platform.
Magna estimates ad spending for total audio will increase by 25% in 2021 reaching $16.0 billion. The ad spending growth will come from podcasting and digital audio (+68%). As expected, with lockdowns rescinded ad spending for out-of-home media bounced back increasing by 14% (from -25% in 2020) and is projected to total $7.1 billion. Magna notes OOH growth will be driven by roadside billboards (+17%) and street furniture (+11%), but not transit (-14). With movies back in theaters, cinema advertising will increase by 53%, led by a strong fourth quarter. After a miserable 2020, publishing will show a modest uptick of +2% at $16.6 billion, the growth will be driven by digital (+18%) as traditional print ad dollars continue their freefall at (-12%).
Looking at product categories, in 2021 Magna says every major product category will increase their ad spending from 2020 led by drinks, entertainment, retail and technology, Automotive had a strong first half but ad spending flattened later in the year with microchip shortages.
Helping the ad marketplace in 2022 will be three cyclical events. The Beijing Winter Olympics are set to begin from February 4 to February 18. The quadrennial FIFA Men's World Cup will originate from Qatar and is scheduled to take place from November 21 with the final on December 18. The 2022 U.S. midterm elections will also produce incremental increases in ad spending in markets across the country, Election Day will fall on November 8.
Also, factors to consider that could impact the U.S. ad economy in 2022 are the government stimulus package which had aided the U.S. economy in 2021 will be less impactful in 2022. Another issue is the supply chain which should continue into 2022 causing production holdups for such businesses as automotive and consumer electronics impacting inflation.
For 2022, Magna projects continued growth in the U.S. Ad spending in 2022 is projected to increase 13% surpassing $300 billion ($320 billion) for the first time. Magna forecasts that "pure play" digital media will lead the way to growing by 17% and total $190 billion. National TV/video ad dollars are expected to be flat. There is expected to be continued strong growth from long form AVOD and OTT/CTV (+29%) and short-from video + 27% in 2022. Meanwhile, traditional national broadcast/cable ad spend will be down 5%.
Magna projects audio ad dollars to grow by 6% and reach $17 billion, benefited by digital platforms (i.e., podcasting). There will be an anticipated increase with broadcast radio listening as commuting returns to pre-COVID norms. Ad dollars for total print will drop by 1%, despite digital print increasing by 10%. Magna projects digital print will account for 60% of ad dollars next year.
Global Ad Spend: Globally, in 2021 ad spending is also expected to rebound, with estimates to reach $710 billion, an increase of 22% from 2020. Magna points out the +22% will be the largest growth ever reported, surpassing +12.5% registered in 2000. In addition, global ad will surpass $700 billion ($709 billion) for the first time as the global economy strengthens. Looking at 2022 Magna sees continued growth at +12.0%.
In 2021, Magna forecasts global ad spending increases of 31.7% with growth across all 70 markets measured and percent double-digit gains in 68 of them. Besides the U.S. notable increases are projected in major markets; the UK (+34%), Brazil (+30%), Canada (+27%) and Australia (+23%). Ad spending growth will be below average in China (+17%) and India (+14%). Digital media will account for $441.7 billion of ad dollars (62%) with a year-over-year increase of 31.3% (compared to +8.6% for traditional media).
U.S. Ad Spend: In the U.S., in 2021, Zenith Media expects U.S. ad spending across all major media to total $285.2 billion, an increase of 18.6% from $240.3 billion in 2020. For 2021 digital media will capture $183.1 billion accounting for 64.2% of all ad dollar allocation. In 2022 Zenith estimates continued ad spending growth reaching $320.0 billion, an increase of 12.2%. In addition, Zenith forecasts digital media will exceed $200 billion ($214.7) in 2022.
Looking further ahead, Zenith expects the U.S. ad marketplace to increase by an additional $80 billion by 2024, with a lion's share of the growth coming from digital media. Zenith estimates the U.S. market will continue to be strong accounting for 48% of the entire increase in global ad spending.
In 2022 social media, at $75.3 billion, is expected to account for the largest share of ad dollars in digital and traditional media, with a year-over-year increase of 20%. Zenith projects more ad dollars will be invested in social media in 2022 than in all of television. In addition, in 2022 the ad volume of social media will more than double the amount allocated in the pre-pandemic year of 2019 ($36.8 billion). Zenith forecasts ad growth for social media to approach $100 billion by 2024.
The second largest digital platform in 2022 will be paid search at $54.3 billion, an increase of 15% from 2021. Internet video ranks third among digital platforms and will generate $41.1 billion in 2022 (+20% from 2021) followed by display at $33.9 billion (+15% from 2021).
Looking at traditional media, Zenith forecasts ad spending for television will total $62.4 billion in 2021 and is forecast to increase 4% to $65.2 billion. With mid-term elections, the ad spending growth will come entirely from spot television which is expected to reach $26.0 billion next year. The growth for the remaining television sources in 2022, network ($16.4 billion), cable ($20.4 billion) and syndication ($2.4 billion) will be flat.
Radio, out-of-home and cinema are expected to continue to rebound from the pandemic and economic slowdown. Zenith forecasts local and network radio ad spending in 2022 to grow by 6.6% from 2021 and total $14.8 billion. Similarly, out-of-home media is expected to increase ad spending by 10.5%, reaching $9.2 billion. With more films being released to movie theaters, cinema advertising is projected to reach nearly $700 million in 2022, a year-over-year increase of 70%. Nonetheless, despite the year-over-year increase, Zenith estimates in 2022 ad dollars for radio, out-of-home and cinema will be below the pre-pandemic year of 2019.
The ad spending for newspapers and magazines are expected to continue their downward trend in 2022. Zenith expects ad spending to newspapers to total $7.2 billion in 2022, a drop-off from the previous year of 10%. Similarly, year-over-year ad spending for magazines will drop by 9% totaling $8.2 billion.
Global Ad Spend: Zenith projects global ad spending will continue to recover from the worldwide pandemic. Zenith estimates in 2021 global ad dollars will grow by 15.6% reaching $705 billion, surpassing the $634 billion total from 2019. Zenith notes ad spending for all global regions will be well above pre-pandemic levels, with expectations for healthy growth in the upcoming years. Hence, in 2022 Zenith forecasts the ad market to increase by an additional 9.1% to total $769.4 billion.
Looking ahead, Zenith expects the global ad marketplace to increase by 5.7% in 2023 and 7.4% in 2024. The agency expects the two fastest growth regions from 2021 to 2024 to originate from Central & Eastern Europe (C&E Europe) and the Middle East & North Africa (MENA). Both regions will average double-digit annual growth through 2024.
Zenith points out slower progress in containing the pandemic resulted in consumers’ reluctance with in-store shopping. As a result, retailers and advertisers continued their investment in digital media. With a stronger than anticipated second half of 2021, digital advertising projections will grow by 25% year-on-year in 2021, compared to the 19% estimated in the previous forecast, from July. Zenith also notes all projections were completed before the Omicron variant was known.
U.S. Ad Spend: According to GroupM, the U.S. ad marketplace in 2021 is expected to increase year-over-year by 22.7%. When political advertising is removed from 2020, ad growth will be 28.4%, resulting in one of the fastest growing years recorded. Leading the growth is expected to be "pure-play" digital media +39% for the previous year. With a stronger than anticipated digital media market, GroupM had revised heir forecast from +29% issued in June.
GroupM projects in 2021, digital media will account for 60% of total U.S. ad dollars, up from 54% in 2020 and 47% in 2019. Looking ahead GroupM expects digital media will account for 71% of all ad spending by 2026.
GroupM cites trends that could impact the advertising economy in 2022. Among these factors include supply chains, inflation, data availability for digital media and the continued growth of Alphabet, Meta and Amazon.
Other media factors include the continued investment of streaming video which impacts TV usage. (In addition, streaming video from the U.S. is being distributed globally.) As a result, GroupM points out that connected TV now accounts for 24% of TV consumption, up from 19% in 2020. In the meantime, pay TV subscriptions continue to drop impacting reach. Television however, should continue to be a source for advertisers, with new brands and product categories that will support the medium. Another strong revenue source is political ads, GroupM projects for the midterm elections next year political ads will reach an estimated $7 billion. By 2026 political ads will account for over 13% of all TV ads, up from 9% in 2020.
Global Ad Spend: GroupM projects an annual global growth rate in ad spending for 2021 of 22.5%, an increase from 19.2% from a previous forecast (both omit U.S. political ad spending). Similarly, GroupM had increased their global ad spending estimates for 2022. The agency is now forecasting an increase of 9.7% up from 8.8%. For 2021, global media (TV, digital platforms, audio, newspapers and magazines, cinema and outdoor media) is expected to generate $766 billion ad spending and based upon new trends should exceed $1 trillion in 2025. While revenue growth will be strong in the three largest markets, U.S., China and the U.K. which will account for about 70% of the growth and 60% of market share, however, ad spending growth will be prevalent across all 64 global markets analyzed.
For 2021, digital media is expected to grow year-over-year by 30.5%. When digital extensions are excluded, the medium is forecast to generate $491 billion, with an additional 13.5% projected for next year. When the digital extensions are included global ad dollars in 2021 is expected to total $537 billion. As a result, digital media will account for 64.4% of global ad spend in 2021, up from 60.5% in 2020 and 52.1% in 2019. GroupM notes that excluding China, between 80% and 90% of digital advertising will come from Alphabet, Meta and Amazon.
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