Same as the first verse in the second. Global ad spending is once again dominated by digital, and CTV is overtaking linear TV.
GroupM’s global year-end industry growth prediction for 2023 states that, excluding political advertising, global advertising revenue increased by 5.8% to $889 billion. These figures nearly correspond to the 5.9% growth estimate from GroupM’s midyear and end-of-year forecasts, which were released in December.
As complicated and unclear as the indicators were this year, we’ve read them rather well, in contrast to some others,” said GroupM’s global president of business intelligence Kate Scott-Dawkins.
According to GroupM, worldwide ad spend will slow down to 5.3% by 2024.
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Magna’s December global ad estimate, in comparison, projects 7.2% growth in 2024 following a 5.5% increase to $853 billion in 2023.
GroupM has revised its June projection for ad revenue growth in North America to 5.6% in 2023 from 5.1%. However, growth will slow to 4.2% in 2024 if political advertising is taken out. Magna has revised its growth prediction for US ad revenue from 3.6% in 2023 to an even more optimistic 8.4% in 2024.
According to Scott-Dawkins, there will be a decline in the US ad market in 2024 as a result of rising interest rates, uncertainty surrounding foreign ad investment in the US market (particularly from China), and the ongoing conflicts in Israel and the Ukraine.
Magna has a positive prognosis for the upcoming year due to a number of factors, including a stable economy, decreased rates of inflation, and the development of digital. Magna believes that the return of international sporting events like the UEFA European Football Championship and the Paris Olympic Games will increase advertising spending in addition to being a year of US elections.
Digital continues to increase its share of overall ad expenditure and is a consistent high earner for advertising revenue. GroupM projects 9.2% growth in “pure play” digital ad income in 2023. This category includes retail media, search, social media, YouTube, and TikTok, but does not include CTV, streaming audio, or direct-to-consumer (DOOH) revenue. Compared to the 8.4% estimated in the company’s June outlook, that is an increase.
After then, the growth rate of digital ad income will slow to 7.3% in 2024, hitting $662.2 billion. But according to GroupM, consistent growth over time will cause digital ad revenue to reach $1.2 trillion by 2028.
According to Scott-Dawkins, the size of the digital market is “staggering in comparison to the rest of the market.”
However, not everyone is benefiting equally from the advertising money windfall. From 2016 to 2022, the top five advertising sellers—Google, Meta, ByteDance, Amazon, and Alibaba—grew by an average of more than 25% year, which contributed disproportionately to the increase. With these large players removed, the market as a whole is growing at a compound annual rate of slightly more than 0.5 percent.
It starts to resemble a zero-sum game, according to Scott-Dawkins.
Speaking of games, Scott-Dawkins noted that although people’s online and retail experiences are become more “atomized” and algorithm-driven, live sports still provide a shared community viewing experience.
“Instead of sitting down and watching the same nightly news broadcast, people might be getting their news from a single YouTuber or TikTok star,” the speaker stated.
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Sports make up 23.5% of national viewing hours for US adults aged 18 to 49 on linear TV, which is predicted to fall 8.6% in the US by the end of 2023 and 10.7% in 2024.
Streamers like Peacock, whose eclectic offerings range from WWE matches to IndyCar racing to the 2024 Olympics, Max, which added a live sports tier in October, and Amazon Prime Video, which offers Thursday Night Football, Sunday Night Football, MLB, NBA, NHL, NCAA, and US soccer games, are also getting into live sports in an attempt to attract subscribers and reduce churn.
Additionally, more sponsors are pledging to support sports as part of the US upfronts, which is a vote of confidence in sports viewing.
Retail may be able to save you, but CTV cannot.
According to GroupM, sports may be the last bastion of traditional TV, but it is dying. In 2023, TV ads’ global share of total ad income dropped to 17.9%.
According to Scott-Dawkins, CTV is still a “bright spot” and “where all the growth is coming from” in the TV industry, with growth of 10.9% in 2023 and 13.8% predicted in 2024. However, those gains won’t make up for the losses on linear TV. Furthermore, CTV has a lot of unknowns. For example, ad insertion may rise, ad pod length may lengthen, and private placement may become more common.
“We’re almost getting to a point where we’re going to tip the balance,” she said, referring to the revenue split between streaming and linear sources, with more than half coming from streaming sources.
TV, get over it: according to GroupM, retail media income will exceed the total revenue of both CTV and linear TV combined by 2028.
Having said that, China’s slowing retail market caused the rapidly expanding channel to collapse this year. (Four of the top five online retailers in the world are headquartered in China.) Retail media’s projected revenue by the end of 2023 is $119.4 billion, according to GroupM, down from $125.7 million in June.
Nevertheless, GroupM continues to project an 8.3% increase in worldwide retail media income by 2024. China and the US combined are predicted to account for almost 78% of worldwide retail media ad revenue in 2024, but their growth rates are slower than those of Brazil (+37.9%), Mexico (+24.5%), or France (+22%).
Advertisers struggling with attribution and targeting are searching for information near the point of purchase, while third-party cookies are making their farewell bows after numerous encores.
Retailers possess valuable consented data that is logged in, according to Scott-Dawkins.
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