Global Ad Spending Expected to Rebound Faster Than Previously Forecast

For 2021, however, revenue will grow 24% in the U.K. and Brazil, 23% in China and 17% in the U.S., including political advertising.

In a separate report last week that focused exclusively on the U.S., GroupM said ad spending will grow 22% this year, excluding political advertising. That figure included direct mail and directories that were removed from calculations in the global forecast.

GroupM chalked up much of the expected growth this year to the acceleration of digital advertising, which will shoot forward 26% this year, the company estimated, a pace up sharply from its December forecast of 15%.

That move higher reflects more ad revenue at digital behemoths like Amazon.com Inc., Alphabet Inc.’s Google and Facebook Inc. in the first quarter, as well as greater insights into a flurry of digital companies that opened their books to the public as they listed stock, said Brian Wieser, global president of business intelligence at GroupM.

“New evidence in the form of Q1 numbers showed us that these trends were playing out at an even faster pace than we anticipated,” Mr. Wieser said.

Multinational and international marketers, such as Chinese companies spending abroad, are also accelerating digital ad spending, he added.

Since late last year, advertisers have been ratcheting up their spending at digital media companies to reach consumers who are growing used to shopping and devouring content and TV online.

An increase in the number of small businesses launched during the pandemic—many of them digital-only—is likely also fueling the growth in virtual ad spending, as those companies are more likely to invest in their online operations and ads instead of bricks and mortar, according to the report.

The connected TV category will also benefit from the changing consumption habits, GroupM said in its report. Global ad spending in connected TV is on track to grow 25% to $16 billion this year, and will reach $31 billion globally by 2026, according to the report. The company defines connected TV ads as those delivered to a TV through an internet connection, including video-on-demand and delivery to other devices, and excludes the category from its digital advertising figures.

An increase in streaming and digital products from the world’s ad-selling giants is making it possible for brands to execute more global ad deals with fewer players, said Mr. Wieser.

Last year, the top five ad sellers—Google, Facebook, Amazon, Alibaba and ByteDance—generated $296 billion in ad revenue, or 46% of global ad spending, according to the report.

Ten years earlier, the top five ad sellers—Google; Viacom and CBS; News Corp. and Fox; Comcast, and Disney —collected only 17% of global ad spending, GroupM said. Viacom was combined with CBS, and News Corp. with Fox in GroupM’s calculations to reflect common controlling ownership.

“At the time, most of the industry’s largest companies only had a minimal global presence in terms of their ad sales operations,” the report said, referring to the largest sellers 10 years ago. “By contrast, today, the largest sellers of advertising are either focused primarily on China or have a significant presence in most countries on the planet.”

The trend will likely continue as media companies add platforms and streaming services to pull in global audiences, said Mr. Wieser.

As the big U.S.-based media companies expand their direct-to-consumer services—for instance, ad-supported streaming products—around the world, they are going to be able to sell ads in various markets where advertisers historically worked with local media companies, Mr. Wieser added.

“That’s a new thing,” he said. “This global concentration is going to continue.”

To be sure, pandemic-related difficulties could hamper the ad industry’s recovery, according to the report, which cited risks such as inflation, which could lead a company to rethink its budget allocations. There are also concerns around the Tokyo Olympics and advertisers’ campaigns for it as Japan continues to struggle with high rates of Covid-19 infection.

Write to Alexandra Bruell at [email protected]