Despite a growing list of regulatory and economic pressures, including an ongoing war and the threat of recession, the impact on ad spend this year will be “nowhere near as bad as a lot of people think,” according to GroupM’s global president of business intelligence Brian Wieser.
To that end, GroupM has revised its outlook for global advertising growth to 8.4% in 2022, down from the 9.7% it had forecasted in December 2021. The new growth rate excludes the impact of U.S. political advertising, which is expected to reach $13 billion this year — up from $12 billion in 2020.
GroupM reduced its 2022 outlook mostly as a result of a deceleration in China, which accounts for 20% of the global ad market. China’s ad market is expected to grow 3.3% this year, down from the 10.2% originally forecasted, due to the impact of the market’s strict COVID-19 related lockdowns in the first half of the year.
But other markets, such as Brazil and Japan, are expected to outpace December predictions, tempering the impact. India will post the strongest growth of any market at more than 22% in 2022, according to the report. It will be followed by France, Germany, Brazil and Canada, all of which are expected to grow by high single digits. The U.S., Australia and the U.K. are estimated to post slower growth, in the mid-single digits.
GroupM predicts that in the U.S., ad spend will grow 9.3% this year, just shy of the 9.8% estimated in December.
Advertising and economic disconnect
Companies’ concerns over the economic impact of the Ukraine war and privacy changes may be overstated, Wieser suggested during a press briefing about GroupM’s mid-year advertising forecast report.
The ongoing Russia-Ukraine war, which began on February 24, has negatively impacted the advertising industry in the local markets but is “not a major factor” on global ad trends, Wieser said.
Meanwhile, privacy-related changes from Apple and Google, cited by several tech platforms as negatively impacting first quarter results (see Snap and Meta’s quarterly results), are not affecting overall industry spend, according to Wieser.
While increasingly strict privacy regulations and a crackdown on consumer tracking from tech giants such as Apple and Google are decreasing data availability, this does not directly impact changes in advertising budgets, Wieser said. Privacy changes are shifting where money is being spent, but not how much.
Even in the face of a potential recession, GroupM still expects underlying growth in the ad market to outpace that of 2019, as cuts in spending by some marketers will be offset by gains from others. Wieser described it as “a growing disconnect between economic activity and advertising.”
Digital is continuing to command a greater share of global advertising spend, expected to account for 67% of total ad spend globally this year, and 73% by 2027. But growth is decelerating as the digital ad market matures. GroupM predicts 12% growth from digital ad spend this year, less than half the 32% growth rate witnessed in 2021.
Television advertising is forecast to grow 4% globally in 2022, while the continued rise of the streaming industry is expected to push spend on connected TV up 24% year-on-year, to account for 12% of global TV spend.
Out-of-home is on track to reach 12% growth by the end of the year as many markets are expected to exceed pre-pandemic levels.