London, United Kingdom – Globally recognized tech platforms are on course to account for 10.0% of all worldwide ad investment by 2030 according to advertising agency WARC’s latest report.
According to the analysis, advertising expenditure by Alibaba, Alphabet, Amazon, Baidu, Meta, Microsoft, Netflix and Tencent in 2021 totalled $46.6b (+49.4% year-on-year), accounting for 6.0% of all ad investment globally. On the current trajectory, Big Tech’s share of global ad spend is estimated to surpass 10.0% by 2030.
Big Tech’s spending on advertising is also growing faster (+49.4%) than categories such as media and publishing (+34%), technology and electronics (+26%) and retail (+21%). The study also found that Big Tech contributed more than a tenth (10.4%) of all global ad spend growth in 2021.
The report has shown that Amazon becomes the world’s biggest-spending advertiser. In 2009, Amazon Founder Jeff Bezos infamously asserted that,
“Advertising is the price you pay for having an unremarkable product or service.” Fast-forward to 2021, Amazon invested $16.9b in ads (+55.0% year-on-year), the most ever spent by a single company within a 12-month period.
However, Amazon’s expenditure model appears to be self-funding: investment in advertising helps Amazon to draw shoppers to its e-commerce platform, which in turn increases the revenue it gains from retail media ads – as well as ad spend on products like Twitch and Freevee.
The second-largest advertiser within Big Tech is Alibaba, which invested $8.8b (+84.4%) in 2021. Fuelled by China’s flourishing e-commerce market, Alibaba has grown its share of total spend in the Big Tech category from 2.9% in 2014 to 19% in 2021 – exceeding Google-owner Alphabet in total ad investment ($7.9b, +47.0%) for the first time.
Meanwhile, Microsoft shows the lowest commitment to advertising. It invested $1.5b in 2021, a sum that has remained stable since 2016. However, this may change in light of the prospective acquisition of gaming company Activision Blizzard and Microsoft’s growing ambitions in the metaverse space.
The report also noted that while Big Tech companies are investing vast sums in advertising in absolute terms, these platforms are also growing revenues at a remarkable rate.
In many cases, Big Tech brands are investing a lower percentage of total sales in advertising. 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 CPG or automotive.
The notable exception is Facebook-owner Meta, which has accelerated its ad investment. Meta’s ad spend as a percentage of sales has grown from a mere 0.8% in 2017 to 2.5% in 2021.
