Marketing growth will accelerate in the post-pandemic era

At the height of the pandemic, Forrester advised companies to continue investing in marketing, arguing that marketing investments made during the recession would sow the seeds for a faster recovery. Two years later, companies seem to have heeded this advice. Although marketing investment by Western companies fell 10% in 2020, in 2021 it rebounded to $2.6 trillion, 1% above 2019 levels.

Not only have marketing investments already recovered from the pandemic, marketing growth is actually going accelerate in the post-pandemic era – growing at a compound annual growth rate (CAGR) of 6% between 2021 and 2025, compared to 5% between 2015 and 2019. One additional percentage point of growth may not seem like much, but it’s significant: It represents an additional investment of $171 billion over five years. This is a notable turnaround given the challenges the pandemic has imposed on the economy.

This growth is based on two dynamics, both linked to the pandemic:

  1. The accelerated shift to digital marketing. Because digital marketing ROI is easier to measure, it’s easier to justify increases in marketing investments.
  2. The ascendancy of marketing in a rapidly changing world. With the pandemic catalyzing shifts in consumer tastes and behaviors, marketing is becoming increasingly important to retain existing customers, reclaim lost customers, and attract new ones.

Marketing growth will not be uniform

Growth will vary widely by industry, ranging from a 2021-2025 CAGR of 21% for Interactive Media & Services to a decline of 1% for Energy. The industries with the fastest growth rates – somewhat counterintuitively – will be made up of both pandemic beneficiaries and laggards:

  • Beneficiaries such as interactive media and services, internet retail and direct marketing, computer software and services, and health tools, which have seen their marketing growth boosted by the pandemic, will continue to grow even after the end of the pandemic.
  • Laggards such as travel and leisure, consumer credit and real estate, which have seen declines during the pandemic, now have plenty of room for a rebound in growth.

Companies should continue to increase their marketing investments

As businesses invest more in marketing, they also need to ensure their budgets are properly aligned with their industry and geography.

This post was written by forecast analyst Brandon Verblow and originally appeared here.

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