Fast-moving consumer goods (CPG) marketers will increase digital ad expenditures by 7% a year to 2023, according to a new Zenith report. That’s well ahead of the 4% total ad spend growth in the category tracked in the report.
CPG digital ad spend will rise from $12.3 billion in 2020 to $14.9 billion in 2023, and its market share will increase from 46% to 49%.
Overall CPG ad expenditure fell sharply in 2020, shrinking by 10.7% to $26.7 billion due to COVID-19 related challenges. While demand was still high, companies were faced with production challenges as supply chains were disrupted and using limited available distribution to get their products onto shelves in stores, or to consumers’ homes.
As such, many CPG companies cut back on promotional activity for products they couldn’t get to consumers quickly enough and invested in distribution infrastructure instead, especially ecommerce operations and partnerships.
Looking forward, CPG ad spend will roughly track the market as a whole in 2021-2023. A bounce-back is almost inevitable in 2021 given the comparison with the sharp drop-off in 2020, particularly during Q2, though it will still be 6% below 2019 levels.
There will be 4.4% annual growth in ad spend between 2020 and 2023, reaching $30.3 billion in 2023. At this point ad spend will have fully recovered from the pandemic-induced drop, exceeding 2019 levels of spending by $500 million.
CPG brands still rely heavily on traditional TV, spending 39% of their budgets on television advertising in 2020, compared to 24% for the average brand.
Out-of-home media is holding strong with the spread of digital displays. CPG out-of-home advertising is forecast to grow by 9% a year from 2020 to 2023, while its market share rises from 6.1% to 7%, slightly ahead of its pre-pandemic share of 6.8% in 2019.
India will be the fastest-growing market by some distance over the next three years, with CPG ad spend expanding by 14% a year. The remaining 11 markets examined in the report are predicted to grow steadily at between 2% and 5% a year.
The 12 markets analyzed are Australia, Canada, China, France, Germany, India, Italy, Russia, Spain, Switzerland, the UK and the U.S., which between them account for 73% of total global ad spend.