The global advertising industry will notch higher growth this year than previously expected as brands are relying more heavily on search engine and social media companies such as Alphabet's Google and Meta Platforms to reach customers during the pandemic, two industry forecasts said on Monday.
Despite a year marked by worldwide supply chain disruptions that delayed products from reaching shelves and a user privacy clampdown by Apple that many feared would disrupt mobile advertising, brands have continued to advertise online as in-store shopping has been slow to return due to the continuing pandemic, said Jonathan Barnard, director of global intelligence at advertising firm Zenith, which published an ad expenditure forecast on Monday.
New businesses formed during the pandemic needed to advertise to find customers, while others likely maintained advertising spending to stay in front of consumers' minds, said Brian Wieser, global president of business intelligence at advertising agency GroupM.
GroupM forecast global advertising spending to grow 22.5 per cent in 2021 from the previous year, while Zenith estimated growth of 15.6 per cent – both estimates were revised up from previous expectations.
Global advertising spending is expected to increase by about 9 per cent in 2022, the reports said.
The growth has been a boon for Alphabet, Meta and Amazon, major sellers of digital adverts and which now account for more than half of all advertising spending outside of China, an increase from closer to 40 per cent in 2019, GroupM said.
It also comes as Alphabet and Meta, the company formerly known as Facebook, both face antitrust investigations in the US and Europe.
The need for marketers to directly reach consumers has also led to the success of retailers like Walmart, Target and Kroger to rapidly grow their own ad sales businesses, allowing brands to aim their shopper data at more customers. This form of advertising grew 47 per cent this year to total $77 billion and is expected to grow to $143bn by 2024, Zenith said.
Retail media networks have been established in China for the more than a decade, but its rise in other markets has been remarkable, Mr Barnard said.
"In the last five years, it has grown explosively out of nowhere outside of China," he said.