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Advertising Market Keeps Growing Much Faster Than Expected, Forecasters Say

Advertising Market Keeps Growing Much Faster Than Expected, Forecasters Say
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The advertising market continues to expand much more rapidly than forecasters previously expected.

Global ad spending will grow 22.5% to $763.2 billion this year, excluding US political ad spending, according to the latest forecast by GroupM, which includes media buying agencies and data operations of ad giant WPP PLC.

Those numbers are above GroupM’s forecast in June of 19.2% growth this year and total ad spend of $749 billion. In December, the company forecast a 12% increase for the year.

The report comes at a time when digital advertising is accelerating rapidly.

GroupM said digital ads will represent 64.4% of all ads in 2021, up from 60.5% of the total in 2020 and 52.1% in 2019.

Somewhere between 80% and 90% of digital advertising outside of China will go to Google’s Alphabet company ,

The parent company of Facebook Meta Platforms Inc. and Amazon.com company ,

GroupM estimated.

“The rate of ad growth in general, and digital in particular, is much faster than we expected in June,” said Brian Wieser, Global Head of Business Intelligence at GroupM.

The rise is occurring as small businesses and digital companies such as app developers are spending more on digital advertising. Marketers based in China are increasingly using global digital platforms to reach consumers abroad.

An increasing share of digital advertising is flowing through display or search ads appearing on retailers’ e-commerce platforms, according to another new forecast, this one from Zenith, part of the advertising holding Publicis Groupe..

Many consumer-facing businesses, including retailer Walmart company ,

CVS Health corp.

DoorDash, food ordering and delivery platform company ,

It offers advertisers more ways to reach consumers by using the data they store about shoppers’ purchases. Zenith estimates that media advertising with retailers will grow 47% in 2021 to reach $77 billion globally. This comes after the sector grew by 24% in 2019 and 53% in 2020.

Much of that number comes from Amazon, said Jonathan Barnard, president of Zenith. Amazon does not separate ad revenue in its earnings reports. The company said its “other” segment, which consists primarily of advertising, generated more than $8 billion in revenue in the quarter ended September 30.

“There are certainly retailers that are picking up on this trend and starting to sell more ads over the past 18 months or so. But the bulk of that money is Amazon, as well as various Chinese e-commerce networks,” Mr. Barnard said.

Zenith also predicts that advertising on global social media will outpace TV ad spend next year. The company expects ad spend on social media to reach $177 billion in 2022, bringing previous television advertising to an estimated $174 billion. The spread of the pandemic to e-commerce has accelerated the shift of marketers to social media advertising.

“We would have gotten there, but we got there sooner,” said Mr. Barnard.

Members of Congress have likened Facebook and Instagram’s tactics to those of the tobacco industry. Joanna Stern of the Wall Street Journal reviews the hearings for both to explore what cigarette regulation can tell us about what might come for Big Tech. Photo illustration: Adele Morgan / The Wall Street Journal

write to Megan Graham at megan.graham@wsj.com

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