“Years from now we might look back on this era as a mass genesis event of new business creation.”
New economic data from the U.S. and Europe shows rapid growth in digital advertising for the world’s largest media owners, who collectively saw global advertising gains of around 40% in the first quarter of 2021.
The latest GroupM report notes a rapid growth in digital advertising, and explains how a range of factors, including the notion of creative destruction, is arguably more important drivers of growth in advertising than economic activity alone.
“Those same factors help explain why we think changes to mobile device operating systems, such as the changes Apple began implementing this week, won’t have a noticeable impact on advertising,” says Brian Wieser, President of Business Intelligence, GroupM Global.
GroupM also reports “unequivocally strong growth in advertising in quarterly earnings results”, specifically with the digital media platforms which will lead the entire industry higher in 2021 in most markets around the world.
Major takeaways, excerpted from the report:
1. The world’s largest digital media owners grew by around 40% globally and by more than 30% in each of the US and Europe during the first quarter of 2021.
At a global level, if we add up our estimates or actual advertising outcomes for the first quarter for Google, Facebook, Amazon, Twitter, Snap and Pinterest we can see approximately 40% growth in constant currency terms.
2. The data illustrates that economic activity may correlate with advertising, but is not necessarily causal.
Overall we can say that within the two regions digital advertising a) grew rapidly despite tepid underlying economic conditions b) grew faster in Europe than in the US on a one year or two-year basis despite stronger economic conditions in the US c) likely experienced slightly faster underlying growth in both regions than we saw before the pandemic.
Marketers may be pre-disposed towards using or increasing the use of digital advertising because their business is organized around digital activities or because they perceive digital advertising to support business, marketing or media goals better than alternatives.Global Marketing Monitor (May 01, 2021), GroupM
3. New competitors can be a catalyst for growth.
Overlapping the aforementioned drivers, actions such as the introduction of new competitors to an existing category, which can occur unpredictably, may cause significant changes to advertising budgets over time.
4. Economic change in the form of broader forms of creative destruction may be a bigger catalyst for growth.
While the pandemic certainly destroyed many businesses, especially in the restaurant, retail and travel sectors, it has concurrently led to the creation of many more, especially related to e-commerce or otherwise related to decentralized business models.
The scale of change may have been so significant that years from now we might look back on this era as a mass genesis event of new business creation.Global Marketing Monitor (May 01, 2021), GroupM
5. Creative destruction may be the most important source driving advertising growth at present.
As new businesses are formed with different conventions related to advertising – let’s say more focused on using e-commerce or digital media than the businesses they effectively replace – and as those new businesses account for a greater share of the overall economy, advertising growth rates can change dramatically.
The above takeaways and more and covered in detail in GroupM’s Global Marketing Monitor report, which arrives at a somewhat surprising and upbeat conclusion:
Apple’s changes to iOS and the deprecation of third-party cookies won’t likely impact media owner ad revenue growth rates.
Click here to read the full report.