Big Tech heads towards 10% of global ad investment | WARC | The Feed

Big Tech heads towards 10% of global ad investment

Advertising expenditure last year by Alibaba, Alphabet, Amazon, Baidu, Meta, Microsoft, Netflix and Tencent accounted for 6% of all ad investment globally and could hit 10% by 2030, according to the latest Global Ad Trends report from WARC Media.

Why it matters

The eight Big Tech platforms spent $46.6 billion on advertising last year, underlining their importance to the health of the global ad economy. Big Tech’s spend on advertising is also growing faster (+49.4%) than categories such as media and publishing (+34%), technology and electronics (+26%) and retail (+21%). Analysis by WARC finds that Big Tech contributed more than a tenth (10.4%) of all global ad spend growth in 2021.

Takeaways 

• Amazon invested $16.9 billion in ads in 2021 (+55% year-on-year), the most ever spent by a single company within a 12-month period. 
• Amazon’s expenditure model appears to be largely self-funding: investment in advertising helps Amazon draw shoppers to its e-commerce platform, which in turn increases the revenue it gains from retail media ads (and there’s also ad spend on products like Twitch and Freevee).
• Alibaba invested $8.8 billion (+84.4%) in 2021, exceeding Google-owner Alphabet in total ad investment ($7.9 billion, +47.0%) for the first time.
• Microsoft shows the lowest commitment to advertising, investing $1.5 billion in 2021, a sum that has remained stable since 2016. This may change in light of the prospective acquisition of gaming company Activision Blizzard and Microsoft’s growing ambitions in the metaverse space.
• In many cases, Big Tech brands are investing a lower percentage of total sales in advertising (Meta is an exception). These businesses do not feel bound by rules to maintain levels of ad spend relative to total sales, as one might find in categories such as consumer packaged goods (CPG) or automotive.

Key quote

“While digitally-native brands can succeed in the short-term without the support of ad spend, long-term success often depends upon a willingness to invest in performance-enhancing and brand-building advertising” – Alex Brownsell, head of content, WARC Media.

Read the report in full: WARC Global Ad Trends: Big Tech’s growing share of the post-COVID ad economy

^{[Image: Brett Jordan from Unsplash]}