A new world record: global ad spend bounces back, with digital leading the charge

According to the latest Magna Advertising Forecast, there’s plenty for performance marketers to be happy about right now, with the money that stopped flowing when the COVID-19 pandemic turned off the tap early in 2020 sloshing back into the market, and then some.

Well over half of all ad sales are digital

Global ad revenues were up by over a fifth, boosted by economic recovery, and all of the major industry verticals increased ad spending by double digits, with technology (up 29 percent), retail (up 28 percent), entertainment (up 27 percent) and finance (up 25 percent) leading the way. 

While traditional advertising – predominantly TV, radio, OOH [Out Of Home], print and cinema – has grown back to 90 percent of where it was pre-pandemic, it’s its digital counterpart that has surged ahead to grab the biggest share of media buyers’ wallets. Digital advertising now represents 62 percent of all advertising sales worldwide – in other words the not inconsiderable sum of $442 billion.

Digital bouncing back bigger and better

Digital growth from consumer brands came partly at the expense of traditional linear channels, but in the case of small businesses (who represent the bulk of search and social ad spend and are growing much faster than big brands), it came almost entirely from incremental money being added to the advertising pie. Digital advertising formats (search, social, video, banners, digital audio) grew by up to 31 percent – putting it at 146 percent of the pre COVID-19 market size.

Throughout the world, consumers spent more money than ever in 2021, splurging the savings they were forced to build up in 2020 as soon as restrictions to mobility and shopping were relaxed in the spring or summer. In that environment, national brands and local businesses competed to be the first or the most effective in reconnecting with consumers. Ad spend also benefited from the added driver of rescheduled international sports events – the Summer Olympics and the UEFA Euros.

Vaccination aids economic recovery

Ad growth has been driven by strong economic recovery (global GDP up 5.9 percent) – more than catching up with pre-pandemic levels. Growth was particularly strong wherever COVID-19 vaccination was fast and deep and allowed full business re-opening early in the year. 

Spend grew in all 70 markets, and enjoyed a double-digit increase in all but two; and this growth was above average in EMEA (up 23 percent), North America (up 25 percent) and LATAM (up 26 percent, though this was partly driven by economic inflation). 

Looking ahead to next year the key challenges will be the (hopefully!) tail end of the pandemic and supply chain issues. Pandemic caution is still slowing some verticals in particular, most notably Travel and Movies, but in general more ad spend growth is expected, especially with the big bucks that the Winter Olympics, US Mid-terms and the FIFA World Cup seem certain to draw in. 

The key threats to growth will be to those countries with lower vaccination rates, and verticals affected by supply-chain issues. This includes the insufficient supply of semi-conductors, which has caused some industries, most notably Automotive, to cut production; as well as the insufficient capacity in global shipping and raw materials.