Denstu upbeat on Australia ad spend despite economic turbulence

Chris Pash
By Chris Pash | 14 July 2022
Credit: Oswald Elsaboath via Unsplash

Denstu sees the upward march of ad spend continuing for the rest of this year despite the world’s economic woes, including rampant inflation, galloping home loan interest rates, rising fuel prices and the war in Ukraine.

The mid-year global ad spend report has the Australian ad market forecast to grow by 6.7% to $19.2 billion by the end of this year.

This is a stronger outlook to the January dentsu forecast of 6.1% in 2022 after a 17.6% jump in 2021. 

And the latest forecasts show growth continuing in 2023, up 5.4%, and 4.7% in 2024, with digital and online video being the key drivers.

Advertising investment is forecast to grow by 8.7% globally in 2022.

The dentsu predictions are inline with other key 2022 forecasts for Australia. GroupM expects 5.8%, Zenith 8% to 9% and MAGNA 10%. 

Melanie McDonald, general manager, media investment, dentsu ANZ said: “While it has been a turbulent environmental start to the year, the Australian market continues to see growth in ad spend across all key channels, with digital screens performing particularly well as brands capitalise on market demand.

 “As a result, we have revised our predictions for the remainder of the year and are anticipating digital video will continue to grow, particularly BVOD and CTV, supplementing strong demand in the linear TV market.

“Video is increasingly becoming the new ‘shop window’ by offering both branding and performance outcomes for clients. In addition to this, an accelerating eCommerce and retail display landscape will continue to drive budgets.

“It is pleasing to see the bounce back of out-of-home and sustained growth of audio post the two years of lockdowns.

“Given the current climate, it is our role to best prepare clients for what comes next. This means ensuring clients have greater transparency of ad spend, paired with local and global consumer trends so they can maximise their investment and form deeper, more meaningful connections with their customers.”

Digital has accounted for a 64.8% share of spend in 2022 and is forecast to grow by 6.3% by the end of the year, and by 5.9% in 2023.

TV ad spend, which includes BVOD, accounts for a 20.5% share and is forecast to grow by 5.5% in 2023 and 3.5% in 2024.

The Global Ad Spend Forecast points to a continued recovery despite another year of economic uncertainty, with global 2022 ad spend of US$738.5 billion, which is based on an adjusted growth forecast to 8.7%.

This is based off a stronger 2021 and with the expectation of rising inflation impacting consumer demand. Looking ahead, dentsu expects the 2023 global advertising market to increase by 5.4% to reach US$778.6 billion followed by a further 5.1% increase in 2024.

Digital continues to drive global ad spend growth in 2022 (+14.2%) to reach US$409.9 billion, a 55.5% share of total ad spend. This growth is supported by Video (+23.4%), Paid Social (+21.9%), Search (+12.9%), and Programmatic (+19.9%).

The digitalisation of traditional media will be another key driver of total ad spend growth in 2022.

Boosted by the FIFA World Cup– which will cross over with the traditionally busy ‘holidays’ season for the first time, puts a big retail focus on Q4 and pushes Television ad spend growth to 3.6%, reaching US$192.8 billion. Within this Linear TV is growing by 2.0%, Connected TV (CTV) up by 22.3% and Broadcaster Video on Demand (BVOD) growing by 16.0% as audiences shift to digital platforms.

OOH and cinema will both see encouraging double-digit growth in 2022 (respectively 11.5% and 19.6%). Radio is also forecast to grow, much faster than initially considered with a new reforecast of 5.0% for the year, up from 2.0% in the
January predictions – which is mainly due to faster return to office working.

As with previous predictions, ad spend in newspapers and magazines will continue to decline. In 2022, the Americas will be the top ad spend region at US$329.6 billion and the most dynamic with spend increasing by 13.1%. India at 16.0% growth will stay ahead of the US at 12.8% and Brazil at 9.0% as the fastest growing market.

Industry wise, the greatest growth is forecast for the Technology sector (+11.3%), which has benefited from people’s greater reliance on digital devices. Retail is one of the key sectors of spend growth at a rate of 11.0% in 2022. The sector is driven by a number of factors including the significant growth of e-commerce, the entry of new players, and the introduction of emerging retail platforms.

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