Advertising to grow globally by 8.4% in 2022: GroupM

GroupM has released its global mid-year ‘This Year Next Year’ forecast that shows significant growth in advertising revenue despite fears of an impending recession and ongoing geopolitical situations around the world.

The report says it expects advertising to grow around the world by 8.4% in 2022, excluding the globally distorting effects of U.S. political advertising. “This is slightly below our prior 9.7% forecast from December, a change driven primarily by deceleration in China, which is now forecast at 3.3% versus 10.2% in December of last year. One can interpret the data as slightly negative in direction on a relative basis, but only marginally so, as expected growth on an inflation-adjusted basis is still positive, and similar to what we saw in many years during the 2010s.”

On Digital, the report says pure-play digital advertising platforms should grow by 11.5% on an underlying basis during 2022 versus the previous 13.5% forecast.

With regards to TV advertising, the report says: “After recovering during 2021 with double-digit growth, television appears poised to produce more limited, if still solid growth (excluding the impact of U.S. political advertising) with a 4.4% gain for the medium overall during 2022.”

The forecast is quite bullish about OOH. “Outdoor advertising continues to rebound as it progresses toward pre-pandemic levels in most parts of the world. Early 2022 has been strong as audiences have returned, people spend more time enjoying life out of the home again and new movement patterns emerge. New brands, marketers in the travel category and advancements in data-driven targeting are helping drive growth, too. However, the aforementioned economic challenges still present risks.”

“Although we forecast a slight decline in outdoor advertising during 2022, this is entirely because of current weakness in China — formerly the world's largest OOH market. Excluding China, growth should amount to 14.3% this year as many markets have approached or are soon to exceed their pre-pandemic highs.”

The report further focuses on e-commerce finding its place in a world where in-person activities are resuming, all while pandemic-related lockdowns in China and supply chain bottlenecks from there and war-torn Ukraine contributed to a drag on growth in the first half of 2022.

The forecast doesn’t see a perilous economic state ahead. The reasons are:

• Low unemployment levels, high household savings, strong new business formation.
• Interest rates are rising, but from historic lows, justifying expectations for a deceleration of economic growth without decline.
• Cuts in spending by some marketers will be offset by gains from others and many of the same factors that drove unprecedented growth for the industry in 2021 will continue in 2022.
• Most marketers are still adding to their media budgets in 2022; a key difference between this year and last year is that the rate at which this is occurring for older marketers is simply slower, and at the same time there are likely fewer new marketers emerging.

As per the report, increased consumer price inflation in the markets is expected to average 6.9% this year, sparking fears of recession.

“Despite increased consumer price inflation expecting to average 6.9% this year, underlying growth should outpace that of 2019, even if some parts of the world do end up experiencing a recession.”

As for OOH advertising, the median market is expecting 12% growth, as many of these markets have approached or are soon to exceed their pre-pandemic highs. “We expect outdoor to exceed its 2019 volumes next year, indicating that much of the growth we are seeing at present can still be characterized as recovery driven.”