The UK advertising spend is forecast to grow faster than all other major international markets, largely due to strong gains in digital and TV.
Group M, which released its global end-of-year forecast in December of last year, predicts the UK advertising marketing will grow by 35.7% after a 2.6% decline in 2020. Growth in 2022 will be more modest, albeit a healthy 7.3%.
To put this into context, the world’s largest advertising market – the US – grew by 22.7% last year, although without the spike in political advertising due to last year’s US election campaign, its underlying growth is 28.4%. The global market grew by 22.5%. The global ad industry now stands at $766 billion and is expected to hit $1 trillion by 2025.
These are steep growth rates, although the growth rates are on the back of a sharp decrease in advertising spending in 2020 due to the pandemic.
Experts say that the cause of such a big growth was the increase in opportunities to expand the advertising market that didn’t exist before the pandemic.
- Many small businesses finally went online and used online advertising to market their new digital presence.
- “The pandemic has disrupted shopping habits, rapidly accelerating the adoption of ecommerce,” according to ad agency Zenith.
- An increase in e-commerce platforms, like Amazon, also drove more advertising, as brands increased spending to promote products within retail websites. GroupM forecasters note that marketers in China may have put extra dollars into digital advertising to reach overseas consumers.
Group M global president of business intelligence, Brian Wieser, told Campaign that digital media will continue to capture more market growth in the years ahead, led by Google, Facebook and Amazon.
“We think this figure goes higher, and amounts to 82% in 2026,” he said. “Drivers of this outcome include the increasing presence of highly capitalised, early-stage companies (such as those in the grocery delivery space), internationally based manufacturers advertising locally and the increasing reliance newly formed small businesses have on digital advertising.
“Some of this recent growth will not be sustainable – especially that which is driven by marketers who fail to become cashflow-positive in the near to mid-term – and as a result we think some deceleration in digital advertising is inevitable.”
While traditional media, like TV, radio and print, has a mixed growth outlook, the outsized growth of digital will continue to push the ad industry to new heights.
For a breakdown of advertising spending by medium, data from Statista goes back twenty years. Consider that digital has been growing consistently throughout that time, while traditional advertising mediums continue to contract.
- Magazine spending has been dropping approximately 0.5% year by year, for a total reduction of 3.7% since 2014.
- Newspaper spending has been falling every year since 2008, coming in at 39.8B globally in 2021 (whereas at the turn of the century, newspaper advertising was over $100B globally).
- Radio advertising fell 7.63% in 2020, and Statista doesn’t expect it to recover fully over the next three years.
- Outdoor ads like billboards and bench signs had the biggest drop during the pandemic to $29.15B, but this is after a record high in 2019 of $40.29B. Though it is unlikely to hit that all-time high again in the next three years, it’s predicted to come close.
- TV advertising is the only traditional medium that has remained relatively static. Though it dropped briefly to $141 billion during the pandemic (a decrease of $20B), researchers expect TV advertising to bounce back next year.
Compare this to digital advertising, which grew by $42.56B even throughout the pandemic, and Statista expects digital to reach $455.3B by the end of 2021. Classified, display, and video ads dropped the most during 2020, but all have bounced back this year. Social media also declined, but this reflects an overall trend in lower spending on social media. Only paid search remained relatively steady, even growing a bit during the pandemic.
Which industries spend the most on digital advertising?
From Q3 of 2020 to Q2 of 2021, the biggest spenders on search ads were:
- Insurance ($99,930)
- Online media ($66,625)
- Internet providers ($45,225)
- Computer games ($36,839)
- Legal services ($34,611)
Maybe it’s not a surprise that insurance topped the list, as global disasters give an opportunity for their market. Insurance advertising grew by 7.01% from January to March of 2021. Not only did online media spend significantly less, their advertising expenses shrunk by 31.11%.
Which countries spend the most?
Emarketer reports that of the 37 national markets they gather advertising industry statistics on, “only China recorded overall ad spending growth in 2020, at 7.4%, but even that increase represented a huge deceleration.”According to Statista’s “Advertising Worldwide 2021” report, North America spends the most, followed by Asia and Western Europe. The regions that generated the lowest advertising revenue were the Middle East and Africa, as well as Central/Eastern Europe, though they can boast the highest growth.
US advertising market size is ten times that of most other countries. With total spending at $240.25B, the US spent nearly triple what China spent, which came in at number two with a market size of $84.2B. The third biggest market is another huge drop-off, with Japan topping off spending at $45.99B. The vast majority of countries Statista researched spent less than a tenth of what was spent in the US advertising market
What advertising is the most successful for businesses?
The type of advertising that achieves the best results depends on the audience a business is trying to target. If millennials are the target, they are prolific users of social media, so advertising on Facebook, Instagram, TikTok and Snapchat will be successful.
Older audiences can be reached through newspapers, magazines and TV advertising. Google ads will target all ages successfully.
The best strategy for success is to mix it up. Ross Pike, head of marketing at Exhibition Stand Contractor Quadrant2Design focuses on digital advertising for their Prestige System – both social media and search ads. Most of their business comes via their website so it makes sense to focus on digital advertising. Though they also advertise in industry-specific publications. It makes sense to get to know your company’s needs and focus on the strategies which really work for you’’. Click here to know about video translation
Digital advertising has largely overtaken traditional forms of advertising as the medium of choice for most businesses. This is likely to become even more pronounced in the future as so much of life is conducted online.