Over the past five years, brands and companies have spent more than $880bn on social media ads, and the figure keeps on rising. However, the annual ad spending growth rate in the social media space is far from what it used to be, and the downsizing trend will continue in the following years.
According to data presented by OnlyAccounts.io, total social media ad spending has grown by 9.3% year-over-year and hit $207.1bn in 2023. By 2028, total ad spending is expected to rise to $255bn, while the annual growth rate will drop almost three times to only 3.4%
Ad Spending Growth Rate to Drop for Five Years in a Row
With 75% of Gen Zers and almost half of Millennials making purchasing decisions influenced by social media ads, it`s no wonder brands and companies continue pouring money into this type of advertising. Still, the annual ad spending growth rate shows the market has lost momentum.
According to a Statista survey, brands spent $132.8bn on social media ads in 2020, or 36.2% more than a year before. The following year saw practically the same growth rate, pushing the total ad spending in the market to $181bn. But after four years of double-digit growth rates, 2022 brought a considerable slowdown. While brands and companies spent nearly $190bn on social media ads last year, the annual ad spending growth rate dropped seven times to 4.7%. After recovering to 9.3% in 2023, Statista expects this figure to continue falling over the next five years.
In 2024, brands and companies will spend nearly $220bn on social media ads, or 6.1% more than this year. In 2025, the ad spending growth rate will slip to 4.7% and then drop to 3.8% in 2026. Statista expects this figure to drop to 3.4% by 2028, only one-tenth of the growth rates seen in 2019, 2020, and 2021, when the entire market boomed. The total ad spending will increase from $207bn to $255.8bn in this period.
UK Market to See the Biggest Ad Spending Slowdown
While ad spending slowdown will undoubtedly hit the entire social media landscape, some markets will feel it much more than others. As the world`s largest social media advertising market, which generates one-third of total ad spending, the United States will see the annual growth rate fall from 8.5% to 3.3% between 2023 and 2025.
China, the world`s second-largest social media advertising industry, will see a similar decline, with the ad spending growth rate falling from 10.4% to 3.6%. Japan and Germany, which generate around 6% of total social media ad spending, will see their growth rates drop from roughly 10% to 4% in the next five years. But the UK market will see the biggest slowdown.
As the world`s third-largest social media advertising market, the United Kingdom generated $9.8bn in total ad spending in 2023, almost 8% more than last year. By 2028, the total ad spending in the UK market will grow to $10.9bn, while the annual growth rate will plunge to only 1.5%.
