International agency dentsu has just published its latest Ad Spend Report. The headlines make for encouraging news, given that the past 12 months have been amongst the most challenging in memory for CMOs and their agencies alike.
Combining data from 59 markets, the report anticipates global advertising spend will grow 5.8% in 2021. This as the industry begins to recoup the 8.8% fall in 2020 brought about by the impact of COVID-19.
dentsu analysts predict $579bn will be spent globally on advertising with all regions enjoying growth. Western Europe (7.5%), Asia-Pacific (5.9%) and North America (4.0%) will enjoy particularly strong growth, driven by uplifts in investment in key countries such as India (10.8%), the United Kingdom (10.4%) and France (8.9%).
Given the accelerated change the globe has seen over the past year, it will come as no surprise that digital is expected to account for half of all expenditure for the first time, with social (18.3%), search (11.0%) and video (10.8%) expected to benefit the most.
But does the spend in digital see a decline in traditional TV ads? Not quite, with forecasted growth of 1.7% in 2021 to reach US$169 billion—a 30% share of total ad spend. The driver behind its growth will be the potential return of live sporting events, such as the UEFA European Football Championships and Tokyo Olympic & Paralympic Games.
dentsu’s report also highlights the industry sectors most badly impacted by COVID-19 will see the biggest bounce-backs in 2021. Based on analysis in eight markets, the travel & transport (28.4%), media & entertainment (14.5%) and automotive (13.8%) sectors will all grow, while sectors which all proved relatively resilient in 2020 are set to see further moderate rises: technology (6.0%), finance (5.6%) and telecoms (4.8%), for example.
Although these figures are encouraging and provide us with green shoots of positive growth, it is also predicted that ad expenditure will not return to pre-pandemic levels until 2022, when spending is likely to reach US$619 billion and grow at a rate of 6.9%.
“COVID-19 has presented our industry and the world at large with unique and unprecedented challenges that will leave a lasting legacy” says dentsu international’s Global CEO of Media, Peter Huijboom. “It has undoubtedly accelerated the pace of change and the on-going digital transformation that has been affecting all levels of society for some time”.
The pandemic has changed how we consume media. With people continuing to be confined to their homes, the way people work, learn and socialise has, by necessity, switched online. While we expect a gradual return to normality as lockdowns ease in 2021, the impact on media consumption behaviours is likely to continue.
Moving forward, understanding permanent versus temporary changes in consumer behaviour will be the number one challenge facing brands. Organisations that invest in ways to put consumer intelligence at the heart of their business strategies will grow. Huijboom concurs, “Building hyper-empathy in this new reality will require a real focus and investment in data, e-commerce, and new technologies.”
The dentsu Ad Spend Report is available to download for free. For more details visit:
https://www.dentsu.com/nl/en/reports/dentsu_ad_spend_january_2021
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