Online video advertising overtaking social media
Advertising spending on online video will this year overtake social media, the fastest-growing channel for the previous nine years. Total global advertising expenditure will grow 8.0% this year, down from earlier forecasted 9.1%. adfirm Zenith says in a report.
This year, growth is explained by will Winter Olympics, mid-term US elections and soccer World Cup. Faced with this tough comparison, growth will slow to 5.4% in 2023, before the Summer Olympics and US presidential elections help boost it to 7.6% in 2024, according to the forecast.
Forecasts for North America, MENA and Western Europe this year are unchanged at 12%, 7% and 6% growth respectively. Latin America was downgraded from 9% to 8%, but Asia Pacific was upgraded from 6% to 7%, thanks to a very strong performance from India.
“Severe disruption in Russia and its closest trading partners after the invasion of Ukraine will lead to a 26% decline in adspend in Central & Eastern Europe, even though most other markets in the region will continue to grow.”
HIGH INFLATION
“Adspend has remained on track despite the macroeconomic headwinds that emerged this year. High inflation, concentrated in essentials like heating, petrol, and food, is forcing consumers to reprioritise their spending, particularly the less well-off, and has led to a drop in consumer confidence.”
“But for now, consumer spending continues to grow, as consumers demonstrate their strong appetite for the travel and entertainment experiences that were denied to them over the pandemic. Business confidence is generally high, and corporate investment is rising, and there is little evidence of widespread cost-cutting.”
Most of the new ad dollars will come from the US, which is forecast to expand by US$33.0 billion in 2022, driven by continued, rapid digital transformation, accounting for 57% of all the money added to the ad market this year.
China, Japan, and the UK come next, supplying 9.1%, 6.2%, and 5.8% of new ad dollars, respectively. India is in fifth place, accounting for 4.6% of the growth in adspend this year, even though it is only the twelfth-largest ad market. India will be the fastest-growing market in percentage terms, expanding by 20.8%, driven by election advertising and the resumption of festivals that were cancelled at the height of the pandemic.
TELEVISION
Zenith says that 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.
“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, while print prices will remain stable, because demand for advertising in printed publications is falling as rapidly as readership.”
“Brands that simply buy broad audiences to achieve reach targets will not be able to avoid having to spend more to reach the same audiences”, Zenith predicts.
“Brands that use first-party data to identify their most profitable customers, and combine it with third-party data to target their best prospects in the most efficient channels, will be able to mitigate much of the effect of media inflation.”
ONLINE VIDEO
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.
Online video will overtake social media, the fastest-growing channel for the previous nine years. Social media adspend (which includes video ads in social media feeds) is still forecast to grow at an average rate of 15.1% a year between 2021 and 2024, propelled by rising competition among platforms that is driving continued innovation on formats and closer integration with commerce. Meta’s share of social media adspend outside China has been falling steadily since it peaked at 89% in 2019, reaching 85% in 2021 as TikTok, Snapchat, LinkedIn and Pinterest gained market share. Zenith forecasts social media adspend will rise from US$153 billion in 2021 to US$187 billion in 2022, when it will account for 25% of expenditure on advertising across all media.
Cinema and out-of-home will take third and fourth place among the fastest-growing media, averaging 11.9% and 8.0% annual growth between 2021 and 2024 respectively.
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