After recent disruptions in the global economy, some marketers may be asking themselves, “Is advertising a dying career? Should I sell all my possessions and take up underwater basket-weaving?” But before you panic, remember to do what every good marketer does: Consider the data.
Everyone who has experience with data knows that statistics can be presented differently depending on the questions you ask, whom you ask, and how you gather the data.
So, let’s look at several ways to tackle the question of whether the advertising industry is growing or declining. Along the way, you’ll get a general overview of where the industry is and where it's headed.
Market researchers usually determine market size by a few statistics, such as how many companies participate in the market and how much is spent on the product. The latter gives you the size of the market and the former helps you ensure that the total revenue is due to widespread interest, rather than a few big spenders. Considering the average budget is another way of testing the veracity of revenue as a metric. But for simplicity, let’s look at revenue, starting with worldwide data.
For a broad overview of how much money was spent on advertising in 2021, Statista reports global advertising revenue was $649.22 billion.
Despite pandemic-driven budget cuts in 2020, by the end of 2021, the industry as a whole has grown 11.2%. Keep in mind, this includes all advertising, as traditional advertising fell by a walloping 15.7%.
If you’re looking for statistics to boost your digital advertising budget, let’s consider what the digital advertising industry is worth in particular. But first, we should look at the geographic breakdown, as spending varies a great deal from country to country.
Emarketer reports that of the 37 national markets they gather advertising industry statistics on, “only China recorded overall ad spending growth in 2020, at 7.4%, but even that increase represented a huge deceleration.”
According to Statista’s "Advertising Worldwide 2021" report, North America spends the most, followed by Asia and Western Europe. The regions that generated the lowest advertising revenue were the Middle East and Africa, as well as Central/Eastern Europe, though they can boast the highest growth.
If China had the most growth, why single out the US? Because the US spent the most on advertising by far. With total spending at $240.25B, the US spent nearly triple what China spent, which came in at number two with a market size of $84.2B. The third biggest market is another huge drop-off, with Japan topping off spending at $45.99B. The vast majority of countries Statista researched spent less than a tenth of what was spent in the US advertising market.
For a breakdown of advertising spending by medium, we’ll turn to more data from Statista, as their research goes back twenty years. Consider that digital has been growing consistently throughout that time, while traditional advertising mediums continue to contract.
Compare this to digital advertising, which grew by $42.56B even throughout the pandemic, and Statista expects digital to reach $455.3B by the end of 2021. Classified, display, and video ads dropped the most during 2020, but all have bounced back this year. Social media also declined, but this reflects an overall trend in decreased spending on social. Only paid search remained relatively steady, even growing a bit during the pandemic.
At the beginning of this article, we talked about total revenue as the primary indicator of market size. To have a comprehensive understanding of the market, we should consider where that money is going and how disproportionate those statistics are. Now that we’ve narrowed our focus to digital, let’s look at the industries and mediums that spent the most.
From Q3 of 2020 to Q2 of 2021, the biggest spenders on search ads were:
Perhaps it’s not surprising that insurance topped the list of SEM advertising spending by industry, since global disasters present an opportunity for their market. Insurance advertising grew by 7.01% from January to March of 2021. Not only did online media spend significantly less, their advertising expenses shrunk by 31.11%.
Clearly the majority of global ad revenue went to digital advertising. At the top of this article, I shared data from Statista suggesting that global advertising revenue totalled $649.22 billion. Of that, $455.3B went to digital campaigns.
Research conducted in partnership between IAB and PwC indicates that digital advertising revenues increased by 12.2% in 2020 compared to 2019. Though there was a sharp dip in revenue in the second quarter of 2020, IAB’s senior vice president Susan Hogan reports that advertising revenue “not only had a rebound, we also had double-digit growth.”
In addition to regular end-of-year seasonal buying, she attributes the rebound to political advertising. They highlight video, social media, and programmatic ads as particularly profitable. Spending on search ads lagged behind display, but revenue for both is expanding, by 19.9% and 21.8% respectively.
Now that you have a broad sense of the changing advertising landscape, we’re ready to tackle the question, “Is advertising a growing industry?”
One way that statistics can be slanted is by presenting a narrow view of the data. If the source zooms in on a small dip or anomaly by reviewing only a few years, that little dip can appear to be a worrying trend when zoomed in to the size of a canyon. Take 2020, for example. If you consider it in isolation, the numbers don’t look great for the future of advertising…or most industries! But when you look back at decades of advertising revenue, it’s clear that 2020 was most likely a temporary drop in an otherwise expanding landscape.
Conversely, be careful in relying too much on predicted growth statistics, as they’re ultimately only guesses. Having said that, every single source I reviewed in gathering this data predicted a rosy future for advertising. Emarketer predicts, “This year, all markets will bounce back. India will lead the pack with a 31.7% ad spend increase and will remain No. 1 in growth at least throughout our forecast period to 2025. Most countries will return to or exceed their 2019 trend lines for digital ad spending growth.”
Likewise, in the giant US market, analysis from LEK suggests there was a -7.2% downtick in the compound annual growth rate (CAGR) for US advertising spending in 2020. However, spending has returned to and exceeded the previous CAGR of 4.2%, landing at 4.4% in 2021, with continued growth predicted.
So don’t sign up for those underwater basket-weaving classes or sell all your earthly possessions just yet, as all analysis predicts a healthy rebound for advertising in the coming years.
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Karma has over a decade of experience with content marketing and SEO. In addition to marketing, she writes about tech, music, and politics. You may find her shamelessly singing along with the muzak at the grocery store or giving marketing advice at KarmaBennett.com.