Report: Ad investment by Big Tech at $46.6bn in 2021
May 5, 2022
A WARC analysis of advertising investment by eight major digital platforms has underlined the importance of ‘Big Tech’ to the health of the global ad economy.
Advertising expenditure by Alibaba, Alphabet, Amazon, Baidu, Meta, Microsoft, Netflix and Tencent in 2021 totalled $46.6 billion (€44.11bn), up 49.4 per cent year-on-year, accounting for 6 per cent of all ad investment globally. On current trajectory, Big Tech’s share of global ad spend will surpass 10 per cent by 2030.
Big Tech’s spend on advertising is also growing faster (+49.4 per cent) than categories such as media and publishing (+34 per cent), technology and electronics (+26 per cent) and retail (+21 per cent). Analysis by WARC found that Big Tech contributed more than a tenth (10.4 per cent) of all global ad spend growth in 2021.
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 and Amazon invested $16.9 billion in ads (+55 per cent 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 $8.8 billion (+84.4 per cent) 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 per cent in 2014 to 19 per cent in 2021 – exceeding Google-owner Alphabet in total ad investment ($7.9 billion, +47 per cent) for the first time.
Among the companies analysed by WARC, Microsoft shows the lowest commitment to advertising. It invested $1.5 billion 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.
Big Tech’s ad spend as a percentage of total sales declines
While Big Tech companies are investing vast sums on 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 per cent in 2017 to 2.5 per cent in 2021.
Alex Brownsell, Head of Content, WARC Media, and author of the report, says: “Big Tech businesses have come a long way from being ad investment sceptics, to ranking among the biggest-spending advertisers in the world. As their dominance of the mobile-first digital commerce marketplace increases, so too their share of total global ad spend is likely to grow. It underscores that, 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.”
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