January 18, 2022

Digital Marketing Education

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World’s top advertisers pump up spending

The 2021 tally for marketers won’t be clear until after public companies disclose full-year financial results starting in the early months of 2022. But the latest quarterly filings from marketers confirm a solid rebound, with a spending surge for some major advertisers.

Industry forecasts show a remarkable recovery. In a forecast released last week, WPP’s GroupM said global advertising will jump 22.5% in 2021 to reach media ad revenue of $763 billion, an all-time high, after falling 3.1% in 2020. (Those figures exclude U.S. political advertising, which soars in even years for elections and falls in odd years.)

GroupM expects 2022 global ad growth of 9.7% excluding U.S. political ads and 11.0% including U.S. political ads.

Internet titans, some of which pulled back spending in 2020, have powered up spending this year.

Amazon in 2020 reduced ad and promotion spending for the first time since 2003. But its worldwide marketing expenses in the first nine months of 2021 vaulted 49%.

In a quarterly filing, Amazon said that increase was “primarily due to higher marketing spend, which was constrained in 2020 in response to COVID-19, and increased payroll and related expenses for personnel engaged in marketing and selling activities.”

Given that spending trend, Amazon is on track to report a significant increase in full-year 2021 ad and promotion spending, topping 2019 to reach an all-time high. Amazon is in the prime position to retake the top spot in the Ad Age global ranking coming out in December 2022.

Google parent Alphabet in 2020 slashed ad and promotion spending by $1.4 billion or 21%, the company’s first-ever spending cut, as it “reduced spending and paused or rescheduled campaigns and changed some events to digital-only formats as a result of COVID-19,” the company said in its annual filing.

But Alphabet boosted ad and promotion spending by $1.2 billion in the first nine months of 2021, putting it on pace to record its highest-ever spending for the full year.

In a filing, Alphabet said: “The increase in advertising and promotional activities was driven by both increased spending in the current period and a reduction in spending in the prior year comparable period due to COVID-19.”

Netflix last year reduced marketing spending 16% (its first cut since 2008) even as revenue rose 24% amid heightened demand for online streaming content during the pandemic.

Netflix stepped up marketing this year; in the first nine months of 2021, marketing spending and revenue both increased about 20%.

Japanese internet firm Rakuten ratcheted up ad and promotion spending 37% in the first nine months of 2021.

Alibaba’s sales-and-marketing expenses rocketed 80% in the six months ended Sept. 30, the first half of its fiscal year, as it poured money into marketing and promotions.

Alibaba has pumped up marketing as its revenue growth rate slumps. It has forecast revenue growth of 20% to 23% in the year ending March 2022, down from 41% growth in the year ended March 2021.

If Alibaba continues to spend aggressively for the rest of its fiscal year, Ad Age Datacenter modeling shows Alibaba could come in No. 2 behind Amazon (or possibly No. 3 behind Amazon and P&G) in the December 2022 global ranking based on Alibaba ad and promotion spending for the year ending March 2022.

Alibaba scored fifth in the ranking released today and was No. 15 in the ranking released last December.