Second verse, same as the first. Digital dominates global ad spend again, and CTV is leaving linear TV in the dust.
Overall, global advertising revenue grew 5.8% to $889 billion (excluding political advertising) in 2023, according to GroupM’s global year-end industry growth forecast. These numbers are roughly in line with 5.9% growth projection from GroupM’s midyear forecast and last December’s end-of-year forecast.
“Unlike some others, we’ve done a good job at reading the signs this year, as complex and uncertain as they were,” said Kate Scott-Dawkins, global president of business intelligence at GroupM.
GroupM predicts global ad spend will decelerate to 5.3% in 2024.
In contrast, Magna’s December global ad forecast predicts 7.2% growth in 2024 after 5.5% growth to $853 billion in 2023.
In North America, GroupM expects ad revenue to grow 5.6% in 2023, which is up from 5.1% in its June forecast. But in 2024, growth will decelerate to 4.2%, excluding political advertising. Magna expects an even more bullish 8.4% US ad revenue growth in 2024, following a more conservative 3.6% growth estimate in 2023.
Interest rate hikes, uncertainty surrounding overseas ad investment in the US market (especially by China) and the ongoing Ukraine and Israel-Hamas wars point to US ad market deceleration in 2024, according to Scott-Dawkins.
Factors contributing to Magna’s optimistic outlook for next year include a stable economy, lower inflation rates and the strength of digital. Next year is also a US election year and marks the return of international sporting events, such as the Paris Olympic Games and the UEFA European Football Championship, which Magna predicts will buoy ad spend.
Dear digital
Digital, a perennial heavy hitter for ad revenue, continues to grow its portion of total ad spend. GroupM forecasts that “pure play” digital ad revenue – which encompasses retail media, search, social media, YouTube and TikTok but excludes CTV, streaming audio and DOOH – will grow by 9.2% in 2023. That’s an increase from the 8.4% predicted in the company’s June forecast.
Digital ad revenue will then decelerate to 7.3% growth in 2024, reaching $662.2 billion. But by 2028, thanks to steady gains through the years, GroupM expects digital ad revenue to hit $1.2 trillion.
The size of digital is “staggering in comparison to the rest of the market,” Scott-Dawkins said.
But not everyone is enjoying an equal share of the ad revenue spoils. The top five advertising sellers – Google, Meta, ByteDance, Amazon and Alibaba – grew more than 25% on average each year from 2016 to 2022, disproportionately contributing to growth. Excluding these heavy hitters, the total market shows compound annual growth of a little over half a percent.
“It becomes a bit of a zero-sum game,” Scott-Dawkins said.
A sporting chance
Speaking of games, live sports continue to deliver a shared community viewing experience, even as people’s shopping recommendations and online experiences are becoming increasingly “atomized” and guided by algorithms, Scott-Dawkins said.
“People may be getting their news from an individual YouTuber or TikTok star, versus everyone sitting down and watching the same nightly news broadcast,” she said.
In linear TV, which is set to decline 8.6% in the US by the end of 2023 and 10.7% in 2024, sports accounts for 23.5% of national viewing hours among US adults aged 18 to 49.
Streamers such as Amazon Prime Video (Thursday Night Football), YouTube (Sunday Night Football), Max (which added a live sports tier in October featuring MLB, NBA, NHL, NCAA and US soccer games) and Peacock (whose eclectic offerings run the gamut from WWE matches to IndyCar racing to the 2024 Olympics) are also getting in on live sports in a play to nab subscribers and cut down on churn.
And in a vote of confidence for sports viewership, more brands are committing to sports as part of the US upfronts.
CTV can’t save you, but maybe retail can
Sports may be a lifeline for linear TV, but the traditional channel is on its way out, according to GroupM. Globally, TV ad revenue decreased to 17.9% of total ad revenue in 2023.
CTV remains a “bright spot” and “where all the growth is coming from” in TV, Scott-Dawkins said, with 10.9% growth in 2023 and 13.8% growth expected in 2024. That growth won’t offset linear TV’s losses, though. And there are many unknowns in CTV. For instance, ad pods could get longer, private placement could become more prevalent and ad insertion could increase.
Looking at streaming revenue versus linear revenue, “we’re almost getting to a point where we’re going to tip the balance,” she said, with more than half coming from streaming sources.
But step aside, TV: By 2028, GroupM predicts that retail media revenue will surpass the combined revenue of linear TV and CTV.
With that being said, the fast-growing channel faltered this year due to China’s dragging retail market. (Of the world’s top five ecommerce retailers, four are based in China.) GroupM estimates that retail media will net $119.4 billion by the end of 2023, down from $125.7 million in June.
Yet GroupM still forecasts that global retail media revenue will grow 8.3% in 2024. Although the US and China together are expected to comprise nearly 78% of global retail media ad revenue in 2024, they’re not growing as fast as Brazil (+37.9%), Mexico (+24.5%) or France (+22%).
As third-party cookies take their final bows after many encores, advertisers grappling with targeting and attribution are looking for data close to the point of purchase.
“The logged-in, consented data that retailers have is valuable,” Scott-Dawkins said.
Source: www.adexchanger.com
