During the depths of the pandemic, Forrester advised companies to continue to invest in marketing, arguing that marketing investments made during the downturn would sow the seeds for a quicker recovery. Two years later, companies appear to have heeded this advice. Although marketing investments by Western companies declined 10% in 2020, in 2021, they rebounded to $2.6 trillion — 1% above 2019 levels.
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 1 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, 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.
Marketing Growth Will Not Be Uniform
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 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.
Companies Should Continue To Grow Their Marketing Investments
As companies invest more in marketing, they must also ensure that their budgets are appropriately aligned with their industry and geography.
This post was written by Forecast Analyst Brandon Verblow and it originally appeared here.