Global marketing spend to grow by 30% by 2025, driven by performance

Forecasts show that marketing spend will hit $4.7tn in three years time, while performance marketing drove 2021 growth through easy-to-measure ROI

Global marketing spend will grow by 30% to $4.7tn by 2025, according to new forecasts.

The latest research from global research and consultancy firm Forrester forecasts that marketing spend worldwide will grow by $1.1tn between 2021 and 2025, a compound annual growth rate of 7%. 

The forecasts, in the new 2022 Marketing Investment Forecast, Global shows that while marketing spend will grow worldwide by 2025, this will vary by sector and region. Marketing spend in China, for example, will constitute 27% of the growth between 2021 and 2025, and the US will account for 46% of the uptick.

Evidence of ROI means performance marketing drove 2021 growth

The research notes that marketing became more “digital” during the COVID-19 pandemic

The report said: “One perceived benefit of digital marketing is that return on investment (ROI) is easier to measure - particularly for performance marketing, which saw the most growth in 2021. For instance, the impact of ads on retail sites like Amazon are much easier to measure than traditional shopper marketing efforts in brick-and-mortar stores. 

“With a clearer view of marketing’s ROI, CFOs will be more willing to consider CMOs’ requests to allocate a greater share of revenue to marketing.”

Despite marketing spend dipping in 2020 at the height of the pandemic, changes in consumer behaviour as a result will also mean that organisations will need to up their marketing spend to attract, retain and recapture customers, Forrester concluded.

China to see fastest annual growth in marketing spend

The US accounted for 40% – or $1.4TN – of the globe’s marketing spend in 2021, 7.7% of US revenue compared to the global average 5.6% of revenue spent on marketing. By contrast China’s marketing spend was worth 3.3% of its revenue last year. 

However, China’s annual growth rate is forecast to be the fastest of any territory, at 13%, compared to 10.4% for Spain, 8% for the US, 6.6% for Southeast Asia and 2.7% for the UK. China and the US combined will account for 73% of the global growth in marketing spend between 2021 and 2025.

“Pandemic beneficiaries” to drive growth

Forrester forecasts that seven industries will see annual growth rates of 10% or more between 2021and 2025. They include “pandemic beneficiaries” such as interactive media and services, internet and direct marketing retail, IT software and services and healthcare tools. 

Those industries that were hit hard during the pandemic, including travel and leisure, consumer finance and real estate will also see fast growth rates over the next few years, bouncing back from a slow recovery from a hard 2020. Despite accounting for just 7% of marketing spend in 2021, IT software and services will drive 14% of growth between 2021 and 2025 - the largest proportion of any industry.

Looking back, healthcare and online retail performed well through the pandemic, with financial services, property and travel lagging behind. Internet and direct marketing retail’s marketing spend globally was 13% up on 2019 levels in 2020, and 34% up on 2019 levels in 2021.