Annual marketing spending will reach $ 4.7 trillion by 2025, an increase of $ 1.1 trillion from 2021 to 2025 with a combined annual growth rate (CAGR) of 7% – an acceleration above the CAGR of 5% from 2015 to 2019.
This is stated by the analytical company Forrester, which published a new report entitled “Marketing Investment Forecast for 2022.
Brands are eager to understand how to adjust their marketing investments based on the impact of the pandemic. They will continue to increase consumption, however this will vary depending on the geographical area and industry. For example, companies in China and India will experience the fastest growth, while the fastest growing industries will be a mix of pandemic users such as interactive media and services, as well as pandemic backlogs including travel and leisure.
Other key findings in the report include:
- U.S. companies spend the most on marketing – $ 1.4 trillion, or 40% of global marketing spending in 2021. They spend a relatively large amount on marketing – 7.7% of revenue versus a global average of 5.6%.
- Chinese companies will increase their spending on marketing. Chinese companies accounted for only 13% of global marketing spending in 2021, but will account for 27% growth from 2021 to 2025.
- Recovery after the pandemic was quick, but the industry’s performance varied. Healthcare and online retail had good results during the pandemic, while financial services, real estate and travel lagged the most.
- IT software and services will be the biggest driver of dollar growth. While IT software and services accounted for 7% of marketing investments in 2021, they will drive 14% dollar growth from 2021 to 2025 – by far the most of any industry. He was a major user of the pandemic-driven digital transformation.
Brandon Verblow, Forrester forecast analyst, said: “Not only have marketing investments recovered from the pandemic, but marketing growth will actually accelerate in the post-pandemic era – growing at a compound annual growth rate (CAGR) of 6% between 2021. 2025 ., compared to 5% between 2015 and 2019. An additional one percentage point of growth may not seem like much, but it is significant: it represents an additional $ 171 billion in investment over five years. This is a significant turnaround given the challenges the pandemic has imposed on the economy. “
At the heart of this growth are two dynamics, according to Veerblow, both related to the pandemic:
Accelerated transition to digital marketing: Because the ROI of digital marketing is easier to measure, it is easier to justify an increase in marketing investment.
The rise of marketing in a rapidly changing world: with a pandemic that catalyzes changes in consumer tastes and behavior, marketing is becoming increasingly important in retaining existing customers, bringing back lost ones and attracting new ones.
Verblow added that growth will vary significantly depending on the industry – ranging from a CAGR between 2021 and 2025 of 21% for interactive media and services to a 1% drop for energy. Industries with the fastest growth rates – somewhat counterintuitively – will consist of both pandemic users and those lagging behind.
Users such as interactive media and services, internet retail and direct marketing, IT software and services, and health tools, whose marketing growth has been driven by the pandemic, will continue to grow even after the pandemic subsides.
Backlogs such as travel and leisure, consumer finance and real estate, which declined during the pandemic, now have plenty of room to recover.
Verblow said: “As companies invest more in marketing, they must also ensure that their budgets are properly aligned with their industry and geography.”
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