Staff bonuses, share buybacks, increased dividends, double-digit revenue growth, margins in the 16-20% range, and the resurgence of the M&A market are just a few. some of the characteristics that have contributed to a renewed optimism, purpose and vision in the global advertising industry today.
By the end of this month, most of the world’s major advertising holdings and consulting groups will have released their results for 2021.
One thing is clear and clear: the good times have returned to the global advertising industry and there is no shortage of optimism.
But this time around, it’s not due to a cyclical economic rebound like the previous ones the industry has faced. While many economies around the world struggled in 2020, strong economic fundamentals in many markets, often buoyed by state-backed pandemic business supports, helped cushion some of the blows from Covid-19. 19.
This time around, it’s abundantly clear that the growth is coming from accelerated demand for a range of different services – many of them digital – from companies looking to get better value for money and accelerate their plans to digital transformation in post covid world.
If one were to create a word cloud using only text taken from each of the recent year-end statements that accompany the financial statements, the words that would feature prominently would include first-party data, transformation of the business, digital transformation, e-commerce, marketing performance, channel optimization, data and
analytic.
How times have changed.
Three years ago, and before the pandemic, some of these were topics and challenges that many industry players were just beginning to understand. At the time, many argued that the global advertising industry was facing an existential crisis the likes of which it had never faced before. Some have argued that the industry is too big and often too opaque to change. Others argued that so-called “cagencies” and other emerging upstarts, like Accenture Interactive, Deloitte, S4 Capital and Oliver, would flood the market, shake it up and devour their lunches. The game was well and truly in place, others said.
Fast forward three years and while the likes of Accenture Interactive, S4, Deloitte, Oliver – and its parent The Brandtech Group – have indeed made hugely successful inroads and raised the stakes dramatically, markets over time tend to to find a certain balance for all the cohabitants to survive.
What’s interesting, however, is how many traditional agency holding companies have also risen to the many challenges by fighting back, reinventing themselves and repositioning their offerings. Some have succeeded, others are succeeding. Some will fail.
In many cases, traditional creative agencies have attempted, with some success, to position themselves as consultants or experts in customer experience, while their media agency cousins have upped the game in areas such as data, analytics and e-commerce. In other cases, unnecessary and complex agency structures and silos have been eliminated. But there will always be room for improvement and it is possible that a wave of mergers and acquisitions is underway.
For an industry that can be way too hard on itself at times, there’s definitely a lot more bluster in its stride as 2022 dawns. And for good reason, too.
According to a recent report by Zenith, the global media agency, which is owned by Publicis, the global advertising market in 2021 grew 15.6% to a record $705 billion after a tricky and uncertain 2020. This year, Zenith recorded a growth rate of 9.1 pc and 5.7 pc in 2023.
But 2022 will also mark the first time that advertising across all digital channels will exceed 60% of global ad spend, according to Zenith, rising to 61.5% this year and 65.1% by 2024.
Not surprisingly, Zenith notes that social media, online video, data, search, advanced television, data and e-commerce will be the main areas driving this growth.. Agencies following this financial trail should continue to do well. But everything remains to be played.
