Home Newswire 2022 adspend will be $70 billion lower than if Covid-19 had never...

2022 adspend will be $70 billion lower than if Covid-19 had never happened

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The global ad market has recovered more rapidly than expected from the severe slump in Q2 caused by the coronavirus pandemic and is now forecast to shrink by 7.5% to US$ 587 billion across 2020 as a whole, according to Zenith’s Advertising Expenditure Forecasts, published earlier this month. This is a marked improvement on Zenith’s July forecast of a 9.1% decline.

Zenith predicts that global ad spend will grow by 5.6% to US$ 620 billion in 2021, boosted by the favourable comparison with 2020, as well as the delayed Summer Olympics and UEFA Euro football tournament. Despite this bump, spending will remain below the US$ 634bn spent in 2019. In 2022, adspend will grow by 5.2% to reach US$ 652bn, exceeding 2019 by US$ 18bn, though it will be about US$ 70bn lower than it would have been if it had remained on its pre-pandemic track.

These forecasts assume that the global economy will start a sustained recovery as Covid-19 vaccines are introduced in 2021, and are subject to the wide uncertainty over how rapid this recovery will be, the media agency notes.

Zenith points out that digital transformation is rapidly shifting budgets to digital advertising. “We predict that global digital adspend will rise 1.4% in 2020, and increase its share of total adspend to 52%, up from 48% in 2019. The pandemic has forced brands to step up their digital transformation, as ecommerce has proved a vital tool for maintaining relationships with existing customers, mitigating the loss of in-store sales, and even finding new customers”, the company says. It quotes  Euromonitor International forecasts that ecommerce sales will increase 25% this year, while in-store sales will drop by 5%.

“Brands have increased their spending on digital media to promote and drive traffic to their own ecommerce operations and to retailer partners,” Zenith explains. “Search and social media, up 8% and 14% respectively, have proved particularly useful for these purposes.”

Zenith does not expect the growth of ecommerce to reverse once the world starts to recover from the pandemic. “Now that brands have proved the value of digital transformation under stress, they are likely to press ahead with it enthusiastically, devoting even more of their budgets to digital advertising,” the end-of-year market update states. Zenith forecasts that digital advertising will account for 58% of global adspend by 2023.

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