January 21, 2022

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Ad revenues grow at a ‘surprising’ rate as ‘digital is eating the world,’ says GroupM

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UK ad revenues across all media are showing 35.7% growth for 2021, according to GroupM’s annual end-of-year forecast. The UK is growing more rapidly than China (17.8%) or the US (28.4%), making it the fastest-growing of the world’s top 20 markets this year.

Brian Weiser said: “Every time I’ve published a forecast this year, I’ve worried that we’re too aggressive. And nope, we were too conservative… digital is eating the world.”

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The slow progress in containing Covid has led to sustained digital investment. The UK, US and China are all home to large numbers of rapidly-growing businesses, many of which are too small to advertise on TV and rely heavily on Google, Meta and Amazon.

Low interest rates have benefited advertising disproportionately because they make it possible to drive results through “growth hacking” techniques — investing heavily in advertising to drive revenue growth at any cost.

The grocery delivery space, for example, features several start-ups operating in central London, many of which are major buyers of advertising. Not all this activity will be sustainable, and not all these businesses will survive, although the change in consumer habits does look to be permanent.

Brian Wieser, global president of business intelligence at GroupM, said: “In the UK, we published an update in September and the numbers just kept coming in stronger and stronger. It was heavily concentrated in digital but in the UK, TV kept up pretty well. The pace at which growth is occurring is just so surprising on so many levels.”

GroupM found that in the biggest markets, the correlation between advertising and economic activity actually went down. In China, there’s no correlation at all, and in the US and the UK it’s not as strong as you might think.

Wieser added: “The majority of consumers have demonstrated that they are not meaningfully affected by the pandemic. There are clearly people who are deeply negatively impacted, but one of the unusual consequences of the pandemic is just how narrowly concentrated those outcomes have been. Beyond certain categories, like hospitality and travel, you are basically as you were… you are just deploying your money elsewhere.

TV is expected to return to 2019 levels in nine of the top 20 markets this year, including the UK, where large marketers have continued to retain their budget share allocations to television in 2021, despite the growth in all forms of digital media.

Zenith’s forecast tells the same story of digital domination, predicting 25% growth for 2021, up from a 19% prediction in July. Digital is expected to exceed 60% of global adspend in 2022, overtaking traditional TV, as online video grows 14%.

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