Media agency Zenith expects television advertising spending to rise 3.2% in 2022, to $64.4 billion, in a year with a Winter Olympics and midterm elections.

Zenith sees network broadcast falling 2% to $15.9 billion, national cable down 5% to $19.2 billion and syndication dropping 9% to $2.2 billion. But with political spending exploding, spot is expected to increase 15% to $27.2 billion.

In 2023, the forecast is for a drop in TV spending, with broadcast, cable and syndication flat, but spot dropping 10% in a political off-year.

For 2024, Zenith sees TV spending rebounding in a presidential election year with spot jumping 20%. The agency sees broadcast, cable and syndication again flat.

Total internet ad spending is expected to increase by 16.6% to $218.2 billion in 2022, a slowdown from 33.7% growth in 2022. Internet video is seen climbing 20% to $41.1 billion.

Also: National Linear TV Ad Spending Rose 5% in April: SMI

In 2023 internet advertising is seen rising 8.3%, posting another 11% worth of growth in 2024, with internet video rising 12% in 2023 and 15% in 2024. In North America unchanged at 12%.

Global advertising expenditures are forecast to grow 8% in 2022, according to Zenith’s latest Advertising Expenditure Forecasts report, published Wednesday. This represents a minor downgrade from the 9.1% growth rate Zenith published in December. 

Growth will be supported by the Winter Olympics, midterm U.S. elections and the FIFA World Cup, which for the first time will take place in the most advertising-intensive period of the year in the run-up to Christmas. 

Slowdown Seen in ‘23

Faced with this tough comparison, growth will slow to 5.4% in 2023, before the Summer Olympics and U.S. presidential elections help boost it to 7.6% in 2024.

Global linear television advertising is forecasted to grow by 1.1% a year on average between 2021 and 2024, from $173.6 billion to $179.2 billion, as price increases continue to compensate for audience losses.

This ongoing decline in reach and efficiency will drive brands to digital channels, however, including online video, the report said. Television’s share of total ad spend is forecast to fall from 24.6% in 2021 to 20.8% in 2024, while online video’s share increases from 8.8% to 11.1%.

The sustained growth in demand from advertisers is pushing up media inflation, particularly in television. Price increases vary widely for different audiences in different countries, but the global average cost of television advertising across all audiences is expected to rise by 11%-13% this year. 

Online video prices are expected to increase by about 7%, although in this case the supply of audiences is rising. 

“Brands that simply buy broad audiences to achieve reach targets will not be able to avoid having to spend more to reach the same audiences,” the report said. “But brands that use first-party data to identify their most profitable customers, and combine it with third-party data to target their best prospects in the most efficient channels, will be able to mitigate much of the effect of media inflation.”

Zenith predicts 62% of ad budgets will be spent on digital media in 2022, up from 59% in 2021, and that this proportion will reach 65% in 2024.

The agency predicts that online video will emerge as the fastest-growing channel over the next three years, with an average of 15.4% growth per year on average between 2021 and 2024. The growth will be fueled by the rapid development of connected TV, ad-funded video-on-demand, streaming and other video formats. 

Zenith called connected TV a mainstream video platform in the U.S., with a higher penetration than cable TV, and noted that it is becoming established in other markets, especially in Western Europe and Asia-Pacific. The introduction of cheaper ad-funded tiers by subscription video-on-demand services like Netflix and Disney Plus will boost growth further by providing new high-quality environments for brand communication.

Online Video Spend to Rise

Zenith expects online video ad spend to rise from $62 billion in 2021 to $95 billion in 2024.

“Online video is growing by creating new opportunities for building brand awareness, complemented by social media’s capacity for cost-effective targeting with low barriers to entry,” said Jonathan Barnard, head of forecasting for Zenith. “Online video is steadily narrowing the spending gap with television, and will be half as large as television by 2024.”

Ad spending has remained on track despite the macroeconomic headwinds that emerged this year, the Zenith report said. High inflation, concentrated in essentials like heating, gas and food, is forcing consumers to reprioritize their spending, particularly the less well-off, and has led to a drop in consumer confidence. 

But for now, consumer spending continues to grow, as consumers demonstrate their strong appetite for the travel and entertainment experiences that were denied to them over the pandemic, the agency said. “Business confidence is generally high, and corporate investment is rising, and there is little evidence of widespread cost-cutting.”  ■

Advertising spending on TV in the United States is expected to increase 4% to $65.151 billion in 2022 from pandemic lows, but growth will be limited and pale compared to digital video, according to a new forecast from media agency Zenith.

On a worldwide basis, Zenith sees social media spending eclipsing spending on TV in 2022.

Helped by a presidential election, U.S. TV ad spending will rise to $67.234 billion in 2024, but will still be short of its peak of $68.457 billion in 2017.

Zenith expects that after growing just 1% to $16.351 billion in 2022, network TV spending will be flat in 2023 and 2024. Similarly, the agency sees national cable and syndication basically flat from 2021 to 2004.

 Also: Magna Sees U.S. Long-Form Video Ad Revenue Rising 4% in 2022 

Spot TV will climb 10% to $26.031 thanks to the midterms, fall back in 2023 and jump 18% to $28.113 in 2024.

While traditional TV stagnates, spending on internet video in the U.S. is taking off from $24.332 billion in 2020 to $34.219 billion in 2021 and $41.063 in 2022--up 69% over two years. By 2024, Zenith said spending on internet video will hit $52.899.

 Also GroupM Sees 23% CTV Growth, More Political Spending, Boosting TV 

“Brands need to make smart use of online video to mitigate television inflation,” Zenith said in its Advertising Expenditure Forecasts report.

“Television advertising remains the easiest route to mass audience brand awareness, despite years of audience losses to digital media. Brands’ reliance on television is fueling rapid media inflation, which will continue even after the comparison with 2020 has passed,” the report said. “We forecast the cost of television advertising to rise by 11% in 2022, compared to 4% for out-of-home, 3% for digital display, 2% for radio and zero for print. Brands will have to confront their dependence on a medium that consistently delivers smaller audiences for higher prices.”

Zenith forecasts that global ad spending will rise 9% in 2022 and hit $873 billion by 2004, with 48% of that growth coming from the U.S.

The biggest growth will come in social media at 15%, followed by online video at 14%.

Online video ad spend is expected to increase from $62 billion in 2021 to $91 billion in 2024, when it will exceed 50% of this size of television for the first time. Television ad spend will rise from $171 billion to $178 billion over the same period.

“COVID-19 setbacks have extended the period of heightened digital transformation,” Zenith said. “The pandemic has thoroughly disrupted shopping habits. Many consumers who would prefer to browse and purchase in person are shopping online by necessity. Businesses have responded by investing more than would otherwise have been justifiable in new technology, infrastructure, organizational change – and advertising. This includes brand advertising to promote ecommerce platforms, performance advertising to direct traffic to them, and advertising within these platforms (‘retailer media advertising’) to promote specific products, all of which have surged.”

Zenith expects the digital transformation to slow down, but not reverse, as the pandemic eases in 2022. Global spending on digital advertising is seen growing 14% in 2022.

Digital advertising as a whole will exceed 60% of global ad spending for the first time in 2022, reaching 61.5% of total expenditure, and will increase its share to 65.1% by 2024.

Zenith predicts social media will be the fastest-growing sector between 2021 and 2024, with an average annual growth rate of 14.8%. Social media ad spending will reach $177 billion in 2022, overtaking television at $174 billion, according to Zenith. Social media ad spending will rise to $225 billion by 2024, when it will account for 26.5% of all advertising.

“The platforms are also embracing commerce and developing new advanced interactions between brands and consumers. Brands can use self-serve tools to create Augmented Reality experiences and then distribute them through targeted advertising, which can powerfully lift awareness and intent to purchase,” Zenith’s report said. ■

Media agency Zenith is forecasting a decline in U.S. TV ad spending in 2021 as audiences shrink and marketers pour their advertising dollars into digital video.

"Audiences continue to migrate online, and online video viewing is growing rapidly, even as traditional television ratings shrink again after a one-off spike when lockdowns began in 2020," Zenith said in its report. "Advertisers value online video as a means of maintaining reach while television declines, but it's an effective form of brand communication in its own right."

Zenith sees total TV spending in the U.S. shrinking 4% to $60.575 billion in 2021 from $63.4 billion in 2020. Zenith sees TV spending growing again in 2022 to $63.224 billion, but staying flat in 2023.

Also Read: BIA Sees Stronger Than Expected Local TV Ad Revenues in 2021

Network TV is expected to rise to $15.306 billion in 2021 from $14.717 billion in 2020. For 2022, the agency sees network spending flat at $15.459 billion for 2022 and 2023.

National cable is seen edging up to $19.99 billion in 2021 from $18.408 in 2020. Cable spending is expected to be $20.190 in both 2022 and 2023.

Spot ad spending is expected to drop to $22.857 billion from $26.891 in 2020. It will rise again to $25.143 in 2022 and stay there in 2023.

Also Read: Magna Sees National TV Ad Sales Up 5% on Stronger Prices

Revenue for syndication are forecast to rise to $2.432 billion in 2021 from $2.384 billion, Zenith said. Syndication revenue is seen flat for 2022 and 2023.

Zenith sees internet video/rich media spending in the U.S. climbing 40% to $34.219 billion in 2021 from $24.442 billion in 2020. The upward trajectory is expected to continue in 2022 and 2023, with spending rising to $38.667 billion and $43.308 billion respectively.

Total major media spending in the U.S. is expected to climb to $271.609 billion in 2021 from $240.248 billion in 2020. It will grow to $290.161 billion in 2022 and hit $304.501 billion in 2023.

Also Read: Cheers! Alcohol Ad Spending Seen Growing 5.3% as Bars Reopen

Looking at the ad business globally, Zenith forecasts that total expenditures will grow 11.2% in 2021, driven by exceptional demand for performance-led e-commerce advertising and brand advertising on online video.

"This year has seen a return to growth, for brands and for the ad market, fueling a significant boost for most areas of ad spend," said Lauren Hanrahan, CEO of Zenith. "Online video and other digital media have seen some of the biggest increases as audiences continue their digital migration to connected TV, streaming services, ecommerce, and social platforms. We predict this will continue, with advertisers following consumers with their investments."

Advertising expenditures will total $669 billion this year, $40 billion more than was spent before the pandemic in 2019, Zenith said. The agency expects advertising expenditures to remain robust, with 6.9% growth forecast for 2022 and 5.6% for 2023.

Also Read: Global Ad Growth Faster Than Expected: GroupM

"Limited supply and rising demand are stoking media inflation," Zenith said in its report. "This year's rapid recovery in ad spend, coupled with the continued migration of audiences from traditional to digital channels, is fueling substantial increases in media prices, particularly in television. The cost of television advertising is up 5% this year on average, though the variance between markets and audiences is wide. Television spending is up by 1%, so the volume of audiences reached globally is shrinking. Digital media growth, in contrast, is mainly driven by rising audiences and more extensive monetization, with online video inflation averaging 7%, and social media roughly flat, compared to their 26% and 25% respective ad spend growth rates."

Zenith predicts that online video advertising will be the fastest-growing digital channel in 2021, rising by 26% to reach $63 billion.

Overall, the agency expects digital advertising to grow by 19% in 2021, and increase its share of total ad spend to 58%, up from 48% in 2019 and 54% in 2020.

As bars, pubs and restaurants reopen around the world with COVID-19 restrictions being loosened, ad spending on beer and spirits brands is expected to rise by 5.3% in 12 key markets studied by media buyer Zenith.

The pandemic hit the alcohol category particularly hard, with spending down 11.6% in 2020, when overall spending decreased by 6.4%.

Also Read: Zenith Forecasts Modest Auto Ad Spending Comeback

“The alcohol industry has suffered more from the pandemic than most, and that was reflected in the steep drop in ad spend last year,” said Jonathan Barnard, head of forecasting at Zenith. “The recovery won’t be as dramatic as the downturn, but investment in digital communication will drive steady growth in alcohol advertising for the next few years.”

Zenith’s Business Intelligence--Alcohol: Beer + Spirits report said spending on alcohol advertising is forecast to reach $7.7 billion in 2023, compared to $6.7 billion in 2020. 

Alcohol brands tend to spend twice as much on TV as the average brand, but they will be reducing their TV spending by 2.4% a year as audiences continue to erode.

Also Read: Video Entertainment Ad Spending Stable: Zenith

Digital advertising’s share of alcohol ad spend is seen rising to 30% of ad spend in 2023, up from 21% in 2019.

The report said that spirits brands have pivoted to owned online content to help consumer replicate the brand experience at home.

“With the drop in consumers visiting restaurants and bars over the past year, alcohol brands had to quickly change their marketing strategy to focus on the at-home experience,” said Lauren Hanrahan, CEO of Zenith. “There was a big shift to eCommerce, and marketers found new ways to engage audiences through social media, video, influencer marketing and other digital channels. We predict brands will continue to increase their spend on not only digital but out-of-home, as people start to go back to bars and foot traffic increases.”

The 12 markets included in the Zenith report are Australia, Canada, China, France, Germany, India, Italy, Russia, Spain, Switzerland, the UK and the US, which account for 73% of total global ad spend.

Ad spending by video entertainment services will be down just 0.2% in 10 key global markets this year, a much smaller decline than the market overall, which will decline 8.7%, according to Publicis-owned media agency Zenith.

In a new study, Zenith noted that video entertainment saw increased demand from consumers, a larger supply of content and intense competition among brands for viewers and subscribers.

“Consumers are now faced with a vast and confusing array of programs and films vying for their attention,” said Christian Lee, global managing director, Zenith. “Video brands need to cut through this complexity and give consumers entertainment that matches their personal preferences with minimum fuss. Brands that provide compelling experiences and act as more than just repositories of content will be best positioned for growth in the long term.”

Video brands will spend 57% of their budgets on digital advertising in 2020, up from 53% in 2019.

“The pandemic instigated an increased demand for digital content. For advertisers that have been slow to incorporate digital video into their marketing mix, now is the time to invest and connect with these audiences. Digital video is rich with measurement opportunities to help brands better understand their consumers, how they engage and what types of content resonate best,” said Lauren Hanrahan, CEO of Zenith, Moxie and MRY.

In the U.S. spending on advertising by online video brands has far outpaced traditional television recently, according to Zenith. In the U.S., online video brands increased their ad budgets by 142% in 2019, while television brands increased their spending by 15%. 

The U.S. is the only market where video entertainment ad spend is expected to continue to decline after 2020, as rising online revenues fail to compensate for the ongoing declines in TV advertising and pay-TV subscriptions, reducing available ad budgets. 

Globally, Zenith forecasts the video entertainment category to underperform over the next two years, with no growth in 2021 and 1.3% growth in 2022.

Online video platforms will have less capacity to raise budgets after spending heavily in 2020, and traditional TV broadcasters will be weighed down by shrinking revenues from TV advertising and pay-TV subscriptions. Nevertheless, Zenith expects video entertainment ad spend to be 1.2% higher in 2022 than it was in 2019, while overall advertising will still be 0.6% below its 2019 peak.

“Consumers are currently benefiting from a generous supply of video content from brands vying for their loyalty,” said Jonathan Barnard, Zenith’s head of forecasting. “This competition is providing a large boost to video entertainment ad spend this year. But this level of investment in both content and advertising will prove difficult to sustain for the long-term, and we forecast very little growth in 2021 and 2022.”

The Zenith study looked at Australia, Canada, Germany, India, Italy, Russia, Spain, Switzerland, the U.K. and the U.S, which among them account for 57% of global ad spend. Video entertainment refers to long-form video content supplied over conventional TV or online, including free TV, pay-TV, and online video-on-demand platforms.

Automakers, a key advertising category, are expected to spend more on media in 2021 and 2022, following a deep 21% decline in 2020, ad agency Zenith forecast.

Despite the increases, spending in 2022 will remain 2.8% below 2019 levels, the forecast said. At the same time, overall spending is expected to be just 0.6% below 2019.

Digital is the only ad channel with 2022 spending topping 2019 levels, according to Zenith.

Auto brands will focus more on premium digital video to compensate for declining primetime TV ratings and make better use of their customer data to target digital ads more effectively, the report said. 

Digital spending will be 9% higher in 2022 than in 2019.

Television is the second-biggest channel for auto advertisers, with a 32% share of spending. The average brand spends 27% on television, Zenith said. 

But in 2020, spending will be 6% below 2019 levels, the agency said.

“Television is still a key platform for their mass-audience brand-building, though premium digital environments are starting to take over this role for some audiences,” the report said. “Auto advertisers also spend more in cinema, which is good at brand-building among young, relatively well-off audiences, and radio, a particularly relevant medium given that a large proportion of radio listening takes place in the car."

Just hours before it was scheduled to ring the opening bell at the NASDAQ Exchange today, measurement company Rentrak rang a few bells of its own, announcing that it has acquired the U.S. Television measurement business from Kantar Media for $98 million in stock and signing an exclusive deal with ad buyer Group M to become the local currency for its TV clients.

Both deals help solidify Rentrak as a solid player in the TV measurement business, a segment that has grown exponentially for the company since CEO Bill Livek joined the Portland, Ore., firm in 2009. The news also comes as Rentrak prepares for its annual Investor Day at NASDAQ headquarters in New York, beginning at 1 pm.

The Kantar transaction will only include the company's U.S. TV measurement business. As part of the deal, Rentrak will also integrate its national and local TV measurement with a number of Kantar’s U.S.-based services that focus on digital media, advertising expenditure and purchase data. The integration will provide advertisers, agencies, TV networks, multichannel video program distributors (MVPDs) and local television stations throughout the U.S. with tools to understand consumers’ purchasing habits and the ability to link TV viewing habits with purchase and other behavior in the United States.

“The combined expertise of Kantar and Rentrak will enable clients to better comprehend and leverage the relationship between United States TV viewing and brands,” said Kantar CEO Eric Salama in a statement. “We are excited about the future products that we can develop with Rentrak for the U.S. television industry.  Clients will benefit from our focus on respondent-level media and purchase data.”

The deal terms involve about 1.53 million Rentrak shares, or 12.4% of Rentrak’s total shares outstanding.  As part of the agreement, Kantar parent WPP will also purchase shares directly from the company for $56 million in cash, giving WPP a final ownership stake of 16.7% of Rentrak’s stock. WPP may also purchase Rentrak shares on the open market so long as its total ownership of Rentrak stock does not exceed 20%.

“This agreement is designed to help all of our U.S. agency and TV advertiser clients with new services in television measurement and consumer insights,” said Rentrak’s Vice Chairman and Chief Executive Officer Bill Livek in a statement. “We are thrilled to be working with WPP and look forward to partnering with Kantar to provide the marketplace with the best next generation of services.”
Goldman, Sachs & Co. served as financial advisor to Rentrak.

With Group M, Rentrak adds its second top ad agency in a week -- it announced a deal with Zenith Media earlier -- to utilize its set-top box-based data.

GroupM manages $105 billion in media billings globally and serves as parent company to Mindshare, MEC, MediaCom and Maxus.  With this deal. Rentrak claims it has contracts with all of the largest agency holding companies.

“Rentrak is thrilled to work with GroupM and its agencies, and that they will use our services for the benefit of their clients,” Livek said in a statement. “This partnership will help our customers achieve maximum profitability.”

GroupM and its agencies will have full access to Rentrak’s TV viewing information and will, over time, use the data broadly. The agency will utilize the measurement company's advanced analytics in automotive and other categories on a local and national basis. On Demand and multi-platform data will be used to provide a more complete picture of television viewing patterns. In addition, Rentrak’s data will be used to quantify viewing levels in more than 200 networks that are not currently measured by the legacy sample currency, as well as in local markets.

“The proliferation of channels has so significantly fragmented audiences that legacy sample methodology simply can’t keep up,” said Irwin Gotlieb, global chairman of GroupM in a statement. “Television measurement needs to move toward census-based methodology. Our agencies are doing such refined targeting and segmentation, and that work can only be supported by census data. It is our hope that we can act as catalysts in moving the industry toward greater data reliability and accountability.”