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2022: WHERE IS THE MONEY GOING?

Three companies – Alphabet, Meta and Amazon – are on course to account for more than half of an advertising market worth $1trn in 2025.


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James Mcdonald Director of Data, Intelligence and Forecasting, WARC


Mercifully, the measured impact of the coronavirus outbreak on advertising trade in 2020 has proven to be short shrift, and the industry rebound this year has been stronger than any recorded in WARC’s four decades of market monitoring.

All product sectors are set to have topped their pre-COVID investment levels by next year, with all but five of WARC’s 19 major sectors having already achieved this in 2021. Future fortunes assume no further shocks to the system, however. The scenario we're considering is that, even with the potential emergence of new variants such as Omicron, high vaccination rates will limit the need for complete lockdowns in most major economies and the consequent impact on advertising growth will be muted.

That said, categories like travel may be more prone to disruption than others, and there is a broader level of risk should a variant emerge that evades vaccines and shows high rates of both transmission and severe illness. Of course, for some there is likely to be no material impact at all. Amazon is expected to finish the year with an ad business worth $12bn more than the start of the outbreak, the newly anointed Meta will be $31bn wealthier, and Alphabet drew an additional $59bn from brands before costs. These three companies now attract 46 cents in every dollar spent by advertisers – up from a dime in 2013 – and will control half of the advertising market by 2023. It is probable that the so-called Triopoly’s combined share will be higher come 2025, when ad trade is projected to be worth over $1trn for the first time. This is being felt on the ground. WARC’s annual survey for The Marketer’s Toolkit, which this year encompasses insights from 1,350 practitioners worldwide, finds that two in three marketers are now prioritising digital commerce – across both social and pureplay platforms. The sector is set to lead advertising growth to 2023, culminating in a market worth $137bn – double the 2020 take. This frontier will shape new thinking behind industry practices for years to come as, pivotally, it’s where the money is now going.

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E-COMMERCE GROWTH TO TAKE THE BATON FROM SEARCH AND SOCIAL

Excluding cinema, which was forced to shutter in 2020 but rebounded strongly, it was the largest online formats – search and social media – which saw the strongest growth this year. This in turn drove the total ad market to its strongest rise (+23.8%) in WARC’s four decades of monitoring.

Further growth, of 12.5% and 8.3%, is forecast for 2022 and 2023 respectively, and the market is on course to top a value of $1trn in 2025.

E-commerce is set to lead growth to 2023, by when the market should be worth $137bn – double its 2020 take.

MARKETERS ARE SEEING VALUE IN ONLINE VIDEO

Digital budgets have grown strongly following COVID-19 disruption and marketer enthusiasm for online channels shows no sign of slowing, according to a WARC survey of more than 1,500 practitioners. Online video and social media lead the pack, while newer channels like podcasts are also attracting higher spend.

Investment in legacy channels, though, is expected to be largely flat as the pandemic rebound eases – around two in five marketers expect their OOH, linear TV and broadcast radio spend to stay the same in 2022.

GLOBAL ADVERTISING SPEND BY ONLINE PROPERTY

ALL PRODUCT SECTORS PROJECTED TO TOP PRE-COVID INVESTMENT NEXT YEAR

Data show that most product categories were able to record a full recovery this year, however, with sectors such as telecoms & utilities worth up to $35bn more than before the crisis following continuous growth.

Notable exceptions include transport & tourism, which leads growth with an absolute increase of $12.5bn this year but is still almost $2.9bn down on 2019 levels.

When compared to 2019, shorfalls of varying degrees were also recorded among a number of CPG sectors this year, including toiletries and cosmetics (down $1.2bn), tobacco (down $378m) food (down $109m) and alcoholic drinks (down $78m). Rapid online investment is resulting in the largest sectors growing among the fastest next year. Business and industrial is one of these; it includes a substantial amount of classified advertising within real estate and recruitment – two bellwethers of wider economic health.

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