Ad Buyer Survey X: 2022 Outlook Implies Further Acceleration Driven by COVID Recovery

THE COWEN INSIGHT

We surveyed 54 US ad buyers representing ~$31BN in U.S. ad spend and 31 Digital-only ad buyers representing $4.4BN in U.S. advertising spending in Dec ‘21. They expect their ‘22 ad spend to rise 7.5% y/y, up from 4.0% growth in ’21, and the strongest growth outlook we have seen in the history of our proprietary survey.

We raised our Worldwide Digital ad forecast by ~5-6% annually from ’22-’26 off of the most bullish ad buyer sentiment we’ve seen in 10 years of surveys, given positive macro sentiment and an ongoing shift to Digital. iOS 14.5 changes appear to be a headwind in ’22. Amazon, YouTube, & TikTok are expected ad share gainers in ’22-’23.

2022 Advertising Outlook is Strong

Our 2022 Advertising Outlook report assesses emerging advertising trends in ’22 and beyond. Results are based on our proprietary annual survey of senior U.S. ad buyers, a separate survey of 31 Digital-only ad buyers re and an update of our proprietary global advertising model.

Net-net, the ad buyers were more bullish on ’22 ad spend growth than any of the prior 9 years we have conducted the survey. 89% expect ad spend to grow vs 67% last year. In turn, we raised our global Digital advertising forecast 5-6% annually from ’22-’26 and are ~4% above 3rd party forecasts on an annual basis.

Changes in Advertising Spend

The Digital advertising migration from traditional channels like TV and radio continues. The ad buyers expect the Digital share of total US advertising to rise 8% over the next two years. Digital Video and Social Video advertising are expected to be the fastest growing channels within Digital advertising over the next 2 years.

Shifts in Global Advertising Spend

We also updated our proprietary global advertising model. We forecast the global Digital advertising market (x-China) reaches $457BN in ’22, up 19% y/y, driven by Video and Social channels. We forecast the US Digital advertising market rises to $221BN, up 17% y/y.

Overall we increased our ’22-’26 Digital ad forecast 5-6% annually as the ad buyers were bullish on:

  1. The broader macro picture, with rising consumer mobility and expectation for demand for goods and services to strengthen
  2. Continued shift to Digital given strong ROI and rising inventory including CTV
  3. Inflationary pressures driving Digital ad pricing further
  4. Supply chain issues abating, among other factors

The leading expected ad share gainers, per the ad buyers, over the next 2 years include YouTube, TikTok, and Amazon; while the expected share losers comprise Google Search, core Facebook, and Instagram. The ad buyer market share sentiment generally aligns with our proprietary market share analysis.

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