GroupM has released the This Year, Next Year Global 2022 Mid-Year Ad Forecast overnight. The forecast shows significant growth in advertising revenue despite fears of an impending recession and ongoing geopolitical situations around the world.
Seb Rennie, GroupM Australia chief investment officer says: “As consumer habits have gradually returned to normality, so have media consumption behaviours. We came into the year with confidence and we still have a lot of confidence in the market for the year ahead and into 2023. In Australia, we are impacted by the ongoing global factors including the war in Ukraine and global supply issues, but we are also impacted by a change in local government, inflation, local energy dynamics and by our geographical proximity to some of the supply issues coming out of the APAC region.”
The forecast found that e-commerce is finding its place in a world where in-person activities are resuming, all while pandemic-related lockdowns in China and supply chain bottlenecks from there and war-torn Ukraine contributed to a drag on growth in the first half of 2022.
Most notably, the forecast also explains why we don’t see a perilous economic state ahead:
• Low unemployment levels, high household savings, strong new business formation.
• Interest rates are rising, but from historic lows, justifying expectations for a deceleration of economic growth without decline.
• Cuts in spending by some marketers will be offset by gains from others and many of the same factors that drove unprecedented growth for the industry in 2021 will continue in 2022.
Most marketers are still adding to their media budgets in 2022; a key difference between this year and last year is that the rate at which this is occurring for older marketers is simply slower, and at the same time there are likely fewer new marketers emerging.
Increased consumer price inflation in the markets we cover is expected to average 6.9% this year, sparking fears of recession. However, we don’t see a perilous economic state. Despite increased consumer price inflation expecting to average 6.9% this year, underlying growth should outpace that of 2019, even if some parts of the world do end up experiencing a recession.
Overall industry forecast:
• 2022 growth: halfway through the year, we expect advertising to grow by 8.4%, excluding the impact of U.S. political advertising (what we call “underlying” growth), slightly lower than the forecast we gave in December 2021.
• In many markets, expectations are higher for 2022 now versus December expectations, although China, the world’s second largest market, is now expected to grow at a much slower pace versus prior forecasts.
• The top five sellers of advertising in 2021, a group including Google, Facebook, Alibaba and Bytedance, generated $408 billion in ad revenue, or 53% of the global total.
Looking out over the next five years, India is expected to grow by double digit levels, while many markets are now expected for grow by mid-to-high single digits:
• France, Germany, Brazil and Canada are expected to grow by high single digits.
• The U.S., Australia and the U.K. are more likely to grow by mid-single digits.
• China is expected to grow by low single digits.
Major areas considered in detail as we reach the midway point of 2022:
• Digital advertising: We now expect growth in ad revenue for pure-play digital platforms of 12% in 2022, an expected deceleration from 2021’s 30% growth rate.
• Under a broader definition of digital advertising, which includes traditional media’s digital extensions, we estimate the industry will account for $618 billion in 2022, or 73% of its total.
• Television advertising: forecasted to grow 4% in 2022.
• Notably, television is becoming increasingly global in ways it never was before.
• Mostly U.S.-based streaming services continue to invest aggressively in local-language content as they move into foreign markets.
• Connected TV environments, including digital ad inventory from streaming services, will capture shares of existing budgets much more than they will drive new ones into the industry.
• While television remains better than many alternatives for the purposes of satisfying reach and frequency goals, its reduced effectiveness will only encourage marketers to explore alternative strategies.
• OOH advertising: the median market we track is expecting 12% growth, as many of these markets have approached or are soon to exceed their pre-pandemic highs. We expect outdoor to exceed its 2019 volumes next year, indicating that much of the growth we are seeing at present can still be characterized as recovery driven.