Annual marketing spend will increase by $1.1 trillion (£840m) to reach $4.7 trillion (£3.6 trillion) by 2025 with data-driven marketing at the forefront as industry growth accelerates in the post-pandemic era.
So says a new report by Forrester, titled “2022 Marketing Investment Forecast”, which reveals that interactive media and services, and online and direct marketing retail which saw their marketing growth spurred by the pandemic, will continue to soar even after the pandemic subsides.
Forrester maintains that brands are eager to understand how to adjust their marketing investments based on the impact of the pandemic.
They will continue to boost spend but this will vary by geography and industry. For example, companies in China and India will see the fastest growth, while the fastest-growing industries will be a mix of pandemic beneficiaries such as interactive media and services, as well as pandemic laggards including travel and leisure.
Overall, US companies spend the most on marketing – $1.4 trillion, or 40% of global marketing spend in 2021, representing 7.7% of revenue compared to the global average of 5.6%.
Marketing spend growth will see a boost from Chinese companies. They represented only 13% of global marketing spend in 2021 but they will be responsible for 27% of the growth from 2021 to 2025.
Post-pandemic recovery has been swift, but industry performance varies. Healthcare and online retail have performed well throughout the pandemic, whilst financial services, property, and travel have lagged the most.
IT software and services will be the biggest dollar growth driver. While IT software and services represented 7% of marketing investment in 2021, it will drive 14% of the dollar growth from 2021 to 2025 – by far the most of any industry. It has been a big beneficiary of the digital transformation spurred by the pandemic.
Underpinning this growth are two dynamics, according to Forrester, both of which relate to the pandemic. Firstly, the accelerated shift to digital marketing, because the ROI of digital marketing is easier to measure, it is easier to justify increases in marketing investments.
Secondly, marketing’s ascendance in a rapidly changing world. With the pandemic triggering changes in consumer tastes and behaviours, marketing is becoming more important in retaining existing customers, recapturing lost ones, and attracting new ones.
Forrester forecast analyst Brandon Verblow said: “Not only has marketing investment already recovered from the pandemic, but marketing growth will actually accelerate in the post-pandemic era – rising at a compound annual growth rate (CAGR) of 6% between 2021 and 2025, versus 5% between 2015 and 2019.
“An extra one percentage point of growth may not seem like much, but it’s significant: It represents an additional $171 billion in investment over five years. This is a notable turnaround given the challenges that the pandemic imposed on the economy.”
Verblow added that growth will vary significantly by industry – ranging from a CAGR between 2021 and 2025 of 21% for interactive media and services to a 1% decline for energy. However, the industries with the fastest growth rates will consist of both pandemic beneficiaries and laggards.
Verblow concluded: “As companies invest more in marketing, they must also ensure that their budgets are appropriately aligned with their industry and geography.”
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