GroupM has released its eagerly anticipated Global Mid-Year Forecast and we can’t be more excited. According to the report, at midway through 2021, advertising growth for the year is far exceeding previous expectations, which has led to a major revision of the forecast for this year and beyond. The key factors most tangibly contributing to accelerated growth in digital advertising are: the faster than expected expansions of app ecosystems, rapid small business formation activities and the growing role of cross-border media marketplaces. Ready to dig deeper? Read on:
Global advertising to grow by 19% in 2021 (excluding US political advertising) – an improvement on GroupM’s prior forecast from December, which anticipated 12% growth. This represents a level of ad revenue that is 15% higher than 2019, as 2020 only experienced a 3.5% decline on revised estimates. Looking beyond the current year, elevated growth is expected to continue as the underlying trends driving this year’s outperformance likely persist.
Global advertising expected to exceed $1 trillion in 2026. This includes American political advertising and compares with $641 billion in 2020 and $522 billion in 2014. Between now and 2026, GroupM expect a CAGR (*compounded annual growth rate) of 6.3%, not far from the 7.0% pace of expansion in the five years before the pandemic, 2014-2019.
Considerable growth forecast for individual markets. During 2021, several major ad markets should see better than 20% growth. This includes expectations for Brazil and the UK to grow by 24%, China by 23% and India by 20%. Many others will rise by the high teens, including Canada, Australia and the US. The median country tracked by GroupM will grow by 11%.
Most of the improvement in growth reflected belongs to digital media. 26% growth for all forms of pure-play digital media is forecast versus 15% at the time of the report’s December update. Expectations for other years are also raised, although to a lesser degree.
The “changes to the availability of data” factor: The elimination of third-party cookies or tighter laws around the use of data, such as GDPR in Europe or California’s CCPA law, should have essentially no impact on total spending, as per the report. Marketers typically make the most of whatever data and signals are available to them and deploy their media resources toward the best-available or least-bad alternative. Limits on data availability can concentrate spending among fewer media owners as control of data becomes similarly concentrated.
Increased consolidation among media owners. According to estimates, during 2020, the top 25 media companies – including proposed acquisitions – accounted for 67% of total advertising revenue (compared to only 42% in 2016). Looking at the data a different way, the top 5 sellers of advertising in 2020 – a group including Google, Facebook, Alibaba and Bytedance – generated $296 billion in ad revenue or 46% of the global total.
Apparently, the pandemic has accelerated growth factors that were in place already before last year. Regardless of some negative considerations related to coming out of the pandemic and a wide range of potential disruptions still to be overcome, the overall view embedded in the forecast is one of optimism. Keep following our Marketing Bites and stay tuned for further insights on the major industry trends.