Zenith’s latest Advertising Expenditure Forecasts, published today, reports a resilient global ad market, with global advertising expenditure expected to grow 7.3% in 2022. While slightly below its 8% forecast in June 2022, it represents historically healthy growth levels.
Zenith expects that resilience to continue into 2023 despite the current economic headwinds, notably with the expansion of new channels such as retail media and advertising on Subscription Video on Demand (SVOD) services with adspend growth of 4.5%. Global adspend growth is expected to accelerate to 7.2% in 2024, around major events, including the US Presidential elections and the Olympics.
Regional Comparison
As stated last year, Zenith expects all regions to continue showing healthy advertising growth over the next few years. We expect the fastest-growing regions between 2022-2025 to be The Americas, and Central and Eastern Europe (excluding Ukraine and Russia) with a compounded annual growth rate of 6.4 %. Over the same period, adspend in APAC and Western Europe is expected to grow on average 5.4% and 4.1%, respectively.
The United States is expected to continue to provide the biggest contribution to advertising growth between 2022 and 2025 with adspend growing $66bn – representing 44% of the overall global adspend growth during the period. The next largest growth will come from China, with close to $20 billion of additional adspend, followed by the United Kingdom, Brazil, Japan and India each adding in the range of approximately $5-6 billion. These six markets represent 72% of the world’s adspend. Other major markets such as Canada and Germany will also be significant contributors to growth, showing the continued importance of mature markets to advertising velocity.
Category Breakdown
Overall, advertising momentum remains positive for several reasons, including rise of new channels such as retail media and SVOD. Online, including Search and Social Media, continues to lead as the fastest-growing category, constituting 55% of overall adspend in 2022 and expected to increase to 57% in 2025, with a compounded annual growth rate of 7.0%.
Despite the overall Online category continuing to gain share, the fastest-growing sub-categories are overwhelmingly from the Video space. Zenith estimates total Video* adspend will make up 30% of the overall advertising market and will grow at a 4.8% compounded average growth rate between 2022 and 2025, supported by the growth of advertising on platforms such as SVOD, FAST and All other AVOD, which includes platforms such as YouTube and TikTok. Out of Home and Audio is also expected to continue its growth, while publishing declines.
Zenith estimates that advertising on SVOD services will grow strongly, reaching $13.1bn in 2025E at a compounded average growth rate (CAGR) of 27.9% from 2022 to 2025. While the launch of advertising on Disney+ and Netflix has gained the most attention, other platforms are likely to follow suit.
Notably, the newer platform of Retail Media, which consists of display and search advertising on e-commerce sites and/or the online sites of traditional retailers, will also drive significant growth as retailers increasingly focus on retail advertising solutions. Outside of China, where Retail Media is already prevalent, Retail Media is expected to grow from $39.2bn in 2022 to $64.2bn in 2025, representing a CAGR of 17.8% over the period. While the retail media category is predominately associated with China at the moment and will continue to be its largest single market, non-Chinese markets will become increasingly important in driving retail media’s rapid expansion. A key driver of the growth of this segment will be the growing importance of e-commerce, reflecting changing consumer habits.
