Social media to be fastest-growing channel by 2024: Zenith ad spend forecast

Digital transformation to drive nine per cent growth in global ad spend in 2022.

Mumbai: Social media will be the fastest-growing channel between 2021 and 2024, with an average annual growth rate of 14.8 per cent, closely followed by online video at 14.0 per cent, predicts Zenith’s Advertising Expenditure Forecasts report, published on Monday. The global ad market will continue its remarkable recovery from the 2020 downturn with 9.1 per cent growth in 2022, after 15.6 per cent growth in 2021, according to the report. Retailer media advertising is set to grow from $77 billion this year to $143 billion in 2024, it said.

Social media is leading ad growth and will overtake television next year, estimates Zenith, with social media platforms embracing commerce and developing new advanced interactions between brands and consumers. The global data analytics firm expects social media ad spend to reach $177 billion in 2022, overtaking television at $174bn. Social media ad spend will rise to $225bn by 2024, when it will account for 26.5 per cent of all advertising, followed by paid search at 22.5 per cent and television at 21.0 per cent. Brands can use self-serve tools to create augmented reality experiences and then distribute them through targeted advertising, which can powerfully lift awareness and intent to purchase.

Covid-19 setbacks have extended the period of heightened digital transformation and thoroughly disrupted shopping habits. Many consumers who would prefer to browse and purchase in person are shopping online by necessity. Businesses have responded by investing more than would otherwise have been justifiable in new technology, infrastructure, organisational change – and advertising. This includes brand advertising to promote e-commerce platforms, performance advertising to direct traffic to them, and advertising within these platforms (‘retailer media advertising’) to promote specific products, all of which have surged.

Digital advertising as a whole will exceed 60 per cent of global ad spend for the first time in 2022, reaching 61.5 per cent of total expenditure, and will increase its share to 65.1 per cent by 2024. Zenith estimates that global ad spend will reach $70577billion in 2021, up from $63477billion  in 2019, and will rise to $87377billion by 2024. Global ad spend will expand by 5.7 per cent in 2023 and 7.4 per cent in 2024 as brands continue using advertising to spur further growth in e-commerce.

“Digital Transformation in India continues to be a priority with one in two corporates having a digital transformation at their core," said Zenith India CEO Jai Lala. "The pandemic has further accelerated digital growth amongst consumers with increased consumption across platforms in the area of entertainment, purchase, social, education and finance, amongst others. All these factors have led to a steady increase in ad spend making digital the fastest growing medium.” 

Television advertising remains the easiest route to mass-audience brand awareness, despite years of audience losses to digital media. Brands’ reliance on television is fuelling rapid media inflation, which will continue even after the comparison with 2020 has passed, says the report. Zenith forecasts the cost of television advertising to rise by 11 per cent in 2022, compared to four per cent for out-of-home, three per cent for digital display, two per cent for radio, and zero for print. Brands will have to confront their dependence on a medium that consistently delivers smaller audiences for higher prices.

Online video is fragmented and complicated to navigate. Multiple platforms deliver content through multiple devices to multiple screens, while ads may be passed through a chain of demand-side platforms, exchanges, ad networks, and content delivery networks before reaching the consumer. But, by investing in data and planning technology, and building partnerships with providers, brands can use online video to increase their reach and reduce their costs. Zenith forecasts online video ad spend to increase from $62 bilion in 2021 to $91 billion in 2024 when it exceeds 50 per cent of this size of television for the first time. Television ad spend will rise from $171 billion to $178 billion over the same period.

Progress towards containing Covid-19 has been slower than expected with the emergence of new variants, and consumers have been less willing to resume in-person shopping. Businesses have continued their heightened investment in digital transformation, during a period in which many expected to ease back as consumers returned to shops. Digital advertising has therefore been stronger in the second half of this year than previously expected. Zenith now estimates that digital advertising will grow by 25 per cent year-on-year in 2021, compared to the 19 per cent estimated in the previous forecast, published in July.

This structural change in the economy means that advertising is playing a greater role in driving sales growth through e-commerce. In particular, it has sparked a surge in retailer media advertising: display or search advertising that appears on e-commerce platforms.

Retailer media can be highly effective, allowing brands to target active buyers at the point of purchase. Zenith estimates that retailer media advertising surged from 24 per cent growth in 2019 to 53 per cent in 2020, and then 47 per cent in 2021, when it totalled $77 billion. This is equivalent to the sums spent on newspaper, magazine, radio and cinema advertising combined, and accounts for 20 per cent of all expenditure on digital display and paid search advertising. By 2024, retailer media ad spend is expected to reach US$143bn, and 27 per cent of display and search. Much of this will be incremental to existing ad expenditure, coming from commercial budgets previously used to negotiate for shelf space in brick-and-mortar stores.