Global advertising expenditure is forecast to grow 8.0% in 2022, according to Zenith’s latest Advertising Expenditure Forecasts report, published today.
Yes, this represents a “minor downgrade” from the 9.1% growth rate Zenith published in December 2021.
Here’s the positive news: linear television advertising is forecast to grow — even if it’s by a fairly small percentage. But, there are clouds on the horizon.
Linear television advertising is forecast to grow by 1.1% a year on average between 2021 and 2024, from $173.6 billion to $179.2 billion, as price rises continue to compensate for loss of audiences, Zenith says.
Don’t get too excited, however: Zenith forecasts Television’s share of total adspend is forecast to fall from 24.6% in 2021 to 20.8% in 2024. In contrast, online video’s share will increase from 8.8% to 11.1%.
“This ongoing decline in reach and efficiency will drive brands to digital channels, including online video,” ZenithOptimedia says, reflecting global trends to SVOD, AVOD and FAST channels.
“Online video is growing by creating new opportunities for building brand awareness, complemented by social media’s capacity for cost-effective targeting with low barriers to entry,” said Jonathan Barnard, Head of Forecasting at Zenith. “Online video is steadily narrowing the spending gap with television, and will be half as large as television by 2024.”
VIDEO TOPS SOCIAL FOR AD DOLLARS
Perhaps the biggest takeaway from Zenith’s latest Advertising Expenditure Forecasts report is this: online video has overtaken social media as the fastest-growing channel for the first time in past decade.
Online video is now predicted to be the fastest-growing channel over the next three years.
Zenith forecasts it will grow 15.4% a year on average between 2021 and 2024, driven by the rapid development of connected TV, ad-funded video-on-demand, streaming and other video formats. It notes, “Connected TV is now a mainstream video platform in the U.S., with a higher penetration than cable TV, and is becoming established in other markets, especially in Western Europe and Asia Pacific.”
Meanwhile, the introduction of cheaper ad-funded tiers by SVOD services like Netflix and Disney+ will boost growth further by providing new high-quality environments for brand communication, Zenith adds. “Mixed video-on-demand models that combined subscriptions with advertising will also help online video audiences continue to grow across the world by recruiting consumers unwilling or unable to afford the growing roster of subscription-only services.”
Zenith expects online video adspend to rise from $62 billion in 2021 to $95 billion in 2024. Additionally, Zenith forecasts social media adspend will rise from $153 billion in 2021 to $187 billion in 2022, when it will account for 25% of expenditure on advertising across all media.
Out-of-Home will reach $45.0 billion in 2024, exceeding the $42.3 billion it achieved in 2019 for the first time.
AUDIO’S PLACE IN THE AD MIX
Higher prices in traditional channels will accelerate the shift to digital alternatives, Zenith forecasts.
“The sustained growth in demand from advertisers is pushing up media inflation, particularly in television, where the supply of audiences is falling steadily as viewers switch to alternatives,” it notes. “Price rises vary widely for different audiences in different countries, but the global average cost of television advertising across all audiences is expected to rise by 11%-13% this year. Online video prices are expected to increase by about 7%, although in this case the supply of audiences is rising. Other digital channels where supply is climbing and volumes are flexible are inflating only modestly, with 3% average price rises forecast for social media and other digital display.”
Out-of-home and radio prices will go up about 4% this year, Zenith notes.
What’s the outlook for Radio, according to Zenith? Local Radio is continuing its COVID-19 impacted downturn, rising to $13.9 million from $13 million in 2021. However, this compares to $16.4 million in 2019. The 2023 total is forecast to equal that of 2022, while 2024 will increase to $14.6 million due in part to election-related political ad dollars.
What about network radio? Continued declines are anticipated, with $883 million expected in 2022, repeating the 2021 total. For 2024, this is expected to dip to $866. In 2019, it was $1.17 million.
— With reporting by Adam R Jacobson
