Skyrocketing Spending on Digital Advertising
Martech Outlook | Monday, September 05, 2022
The global ad market will continue its recovery from the 2020 downturn with 9.1 percent growth in 2022, after 15.6 percent growth in 2021, according to Zenith’s Advertising.
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FREMONT, CA: After experiencing a decline in 2021 of 15.6 percent, the global ad market will expand by 9.1 percent in 2022 to continue its comeback from the downturn. With marketers aiming to use more social media, online video, advanced TV, and e-commerce platforms, global adspend will increase by 5.7 percent in 2023 and 7.4 percent in 2024. In 2022, advertising across all digital channels will spend more than 60 percent of all worldwide ad dollars, accounting for 61.5 percent of total spending. By 2024, their proportion will have increased to 65.1 percent.
Global ad spending is predicted to increase from USD 705 billion in 2021, and then USD 873 billion by 2024. Although it is not taken into account in this estimate, the introduction of the omicron variety will increase the likelihood of additional setbacks to the travel, hospitality, and bricks-and-mortar retail sectors and may lead to further shifts into ecommerce and digital advertising.
Accelerated Ecommerce Fuels Surge in Digital Adspend
The pandemic has changed consumer behaviour, which has accelerated the adoption of e-commerce. Businesses have responded by making investments in infrastructure upgrades, new technologies, organisational changes, and advertising. This comprises advertising for brands to support e-commerce platforms; performance advertising to drive traffic to them; and advertising within these platforms known as retailer media advertising to support particular products, all of which have grown. In 2021, the global digital advertising market will grow by 25 percent annually.
As more individuals shop online for necessities and have become more at ease with online browsing and shopping, there has been an increase in investment in ecommerce channels. The organisations observe some rebalancing of marketing toward in-store communication as consumers start doing their purchasing in-person again. Spending on digital advertising will increase by 14 percent in 2022, nine percent in 2023, and 10 percent in 2024.
Because of the slower-than-expected progress in limiting COVID-19 and consumers' reluctance to return to in-store purchasing, the rate of digital transformation has been faster than anticipated. The return to stores has been delayed by differing views on the efficacy of the vaccination and people's desire to get it, which has led firms to continue relying more heavily than anticipated on ecommerce and digital platforms.
Advertising is Contributing More to the Global Economy
Because of the structural shift in the economy toward e-commerce, advertising now contributes more to the increase in sales. Display or search ads that appear on e-commerce platforms have increased significantly as a result, in particular.
Brands may target engaged consumers right at the point of purchase by using retailer media, which can be very effective. This accounts for 20 percent of all spending on digital display and paid search advertising and is equal to the sums spent on advertising in newspapers, magazines, radio, and movies put together. Retailer media adspend is expected to reach USD 144 billion by 2024, with display and search accounting for 27 percent. This money will primarily come from commercial budgets that were previously used to bargain for shelf space in brick and mortar retailers, adding to existing ad expenditure.
Other forms of advertising, such as brand campaigns on television and out-of-home, where digital brands are now dominant, have also been sparked by the growth of the digital economy. Before the pandemic, advertising's contribution to the global GDP increased steadily. Following a significant increase in e-commerce and digital media consumption last year, it is anticipated to reach 0.80 percent by 2024. The GDP percentage of advertising will increase at its fastest rate since the late 1990s.
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