Annual marketing spend will reach $4.7 trillion by 2025, which represents a growth of $1.1 trillion from 2021 to 2025 at a compound annual growth rate (CAGR) of 7% — an acceleration above the 5% CAGR from 2015 to 2019.

This is according to industry analyst firm Forrester, which has published a new report titled ‘2022 Marketing Investment Forecast.

Brands are eager to understand how to adjust their marketing investments based on the impact of the pandemic.

They will continue to grow to spend, however, this will vary by geography and industry.

For example, companies in China and India will see the fastest growth, whilst 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.

Global Annual Marketing Spending statistics

Other key findings in the report include:

1. US Companies spend the most on marketing – $1.4 trillion, or 40% of global marketing spend in 2021. They spend a relatively large amount on marketing – 7.7% of revenue versus the global average of 5.6%.

2. Marketing spending growth will see a boost from Chinese companies. Chinese companies represented only 13% of global marketing spend in 2021, however, they will constitute 27% of the growth from 2021 to 2025.

3. 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.

4. 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.

Brandon Verblow, Forrester forecast analyst, 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.”

Underpinning this growth are two dynamics, according to Veerblow, both of which relate to the pandemic:

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.

Marketing’s ascendance in a rapidly changing world: With the pandemic catalyzing changes in consumer tastes and behaviors, marketing is becoming more important in retaining existing customers, recapturing lost ones, and attracting new ones.

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.

The industries with the fastest growth rates – somewhat counterintuitively – will consist of both pandemic beneficiaries and laggards.

Beneficiaries such as interactive media and services, internet and direct marketing retail, IT software and services, and healthcare tools, which saw their marketing growth spurred by the pandemic, will continue to see the growth even after the pandemic subsides.

Laggards such as travel and leisure, consumer finance, and real estate, which saw declines during the pandemic, now have a lot of headroom for a growth rebound.

Verblow said: “As companies invest more in marketing, they must also ensure that their budgets are appropriately aligned with their industry and geography.”

Source: MarketingTechNews