Advertising investment is forecast to grow by 9.2% globally in 2022, outpacing real GDP growth[1] projections by 4.7 percentage points, according to the latest dentsu Ad Spend Report. The twice-yearly report which combines data from over 50 markets globally, anticipates US$745bn will be spent globally.
When compared to previous global financial and advertising crises, notably the financial crash of 2008, this rebound is almost three times greater: in 2022 the growth forecast at 9.2% is nearly three times the 3.4% growth in 2011 – second year post global financial crisis. In 2022 the global ad market exceeds the 2019 pre-pandemic level of spend by 18.7%, whereas in 2011 the global ad market continued to be 1.0% lower than in 2008.
Digital and television continue to be the two powerhouses driving global ad spend, yet with opposite dynamics. Digital ad spend is forecast to reach US$408.4 billion in 2022 accounting for a 55.5% share of global ad spend. Television ad spend is forecast to grow by 3.8% in 2022 to reach US$197.8 billion, however share is declining, from 32.7% in 2019 to 26.9% in 2022 with growing focus on Connected TV and VOD.
At Carat, we expect the fragmentation of viewership to play a significant role in the transformation of the industry.
While in many parts of the world Linear Television viewing remains the single best source of quality mass reach and dominates the video advertising day, for several years we have observed an overall downward trend in linear viewing, as audiences embrace on-demand services. Long gone is the time where Netflix was reigning unchallenged over the Over the Top (OTT) segment. As the OTT options explode, a risk of subscription fatigue and higher churn rate looms. As such, hybrid approaches with both premium (SVOD) and ad funded (AVOD) “free” entertainment options could become more frequent among players trying to reach critical mass.
Yet, the rise of on-demand consumption does not mean the end of live, communal viewing experiences in 2022. The year is bookended with two major global sporting events, the Winter Olympics in Beijing in February and the FIFA World Cup in Qatar in November-December (a first in wintertime), which typically command massive TV audiences. Film studios have also built up an important backlog of movies that should hit theatres in the next months and attract crowds on the condition that public gatherings are allowed. Furthermore, new forms of communal experiences are developing at pace. Many platforms such as Taobabo Live,[2] Facebook Live Shopping,[3] and Pinterest TV[4] now offer live shopping experiences to audiences. As for the already popular events on Fortnite,[5] they offer a glimpse of what the metaverse could do for the entertainment industry.
For brands, this viewership fragmentation could lead to new ad investment diversification strategies to contain inflationist trends, structure better deals, optimise reach, and explore booming spaces such as retail media and gaming.
We invite advertisers to reflect specifically on two important brand considerations covered in the report as they prepare their 2022 media strategy:
- Combat inflation through a holistic video approach
The best way to respond to Linear Television viewer erosion accelerated by an on-demand culture taking root during the pandemic and now fuelling aggressive inflation is to use Linear Television more strategically. Although Linear Television and other linear channels are still important, keep a close eye on the value derived from these channels moving forward. Ultimately there will come a point where the price associated with reaching certain audiences will become unreasonable on current models with the main broadcasters. Additionally, brands should invest in content IP and ensure they work closely with SVOD platforms to reach audiences in environments that do not support traditional ad spaces.
- Support diverse-owned media companies
Marketers can address the discrimination at play within the media supply chain through economic inclusion of minority-owned media partners. Whether that is US$5,000 or US$2 million, it can have a positive effect on media partners, enabling them to manage overhead, invest in new technologies, and hire new people. This calls for an open-minded approach and a will to experiment. Advertisers should take the time to have two-way conversations with minority-owned media companies to understand how they can better reach diverse audiences. Brands should also invest in cultural fluency across their organisation to develop a deep understanding of cultural nuances and keep in mind the importance of building a year-round presence – not just showing up during commemorative days or heritage months.
Of course, the global response to the evolution of the COVID-19 pandemic will play a decisive role in how forecasts ultimately play out. Supply bottleneck, rising inflation, and key general, federal and midterm elections held in every region throughout the year will also influence growth prospects, and dentsu recommend the industry keep a close eye on key economic indicators, which is what we’ll be doing in partnership with our clients at Carat to ensure we’re ahead of any disruption.
For more information, please download the full dentsu Ad Spend report
[1] OECD, OECD Economic Outlook, Volume 2021 Issue 2: Preliminary version, Table 1.1 - December 2021 - link
[2] Alizila, Alibaba Fuses Digital Stores with Livestreaming, April 2021 - link
[3] Meta, Newsroom, Introducing Your New Favorite Way to Shop: Live Shopping Fridays, May 2021 - link
[4] Pinterest, Newsroom, Introducing Pinterest TV, a fresh dose of live, original and shoppable creator shows, October 2021 - link
[5] Epic Games, Fortnite presents… The rift tour featuring Ariana Grande, August 2021 - link