The global advertising industry will see higher growth this year than previously expected, as brands are relying more heavily on search engine and social media companies such as Alphabet Inc's Google and Meta Platforms Inc to reach customers during the epidemic, according to two ad industry forecasts released on Monday.
Despite a year marked by worldwide supply chain disruptions that delayed products from reaching shelves and a user privacy clampdown by Apple Inc. that many people thought would disrupt mobile advertising, brands have continued to advertise online because in-store shopping has been slow to return due to the ongoing pandemic, according to Jonathan Barnard, director of global intelligence at advertising firm Zenith.
Brian Wieser, global president of business intelligence at GroupM, said that new businesses formed during the pandemic needed to advertise to find customers, while others kept ads spending in front of consumers' minds.
In the year 2021, GroupM predicted global ad spending to grow 22.5%, while Zenith estimated growth of 15.6% -- both estimates were revised up from previous expectations.
The growth has been good for Alphabet, Meta and Amazon.com Inc, major sellers of digital ads, which now account for more than half of advertising spending outside of China, an increase from closer to 40% in 2019, GroupM said.
It comes as Alphabet and Meta, the company formerly known as Facebook, are facing antitrust investigations in the United States and Europe.
The success of retailers like Walmart, Target and Kroger has led to the success of their ad sales businesses by using their shopper data to target more customers. This year, advertising grew by 47% to total $77 billion and is expected to grow to $143 billion by the year 2024, according to Zenith.
Retail media networks have been established in China for more than a decade, but its rise in other markets has been remarkable, Barnard said.
He said it has grown explosively out of nowhere outside of China for the last five years.