Global Ad Spend Growth Expected to Decelerate in 2024

Despite inflation easing, global advertising spending is set to grow at a lower rate next year than initially expected, with two forecasts expecting a deceleration to mid-single digits. Released in November, marketing data firm WARC predicted that advertising spending would rise by 8.2% in 2024 from a modest 4.4% in 2023. However, two new reports from Dentsu and GroupM this week have predicted slower increases of 4.6% and 5.3% respectively, both ahead of expected inflation levels. If GroupM's forecast of 5.3% growth next year is correct, that would see spending reach $935.9 billion, excluding U.S. political advertising. Meanwhile, the Dentsu Global Ad Spend forecast has predicted an important year for the media sector with third-party cookies finally being shelved, resulting in a huge impact on targeting and measurement of digital advertising, while Amazon will also introduce a new ad-supported plan for Prime Video. It believes that the global advertising market will grow by $33 billion next year, reaching $752.8 billion, due to major media events, including the U.S. presidential election, the Olympics in Paris and UEFA’s European championships tournament in Germany. Ad Industry Hasn’t Shaken off the Economic Slump, but Green Shoots Are Sprouting Cinema advertising could also see growth with several franchise blockbusters being released such as the latest Kung Fu Panda, Dune, Ghostbusters and Deadpool movies and generative artificial intelligence will mature to become more scalable across various media channels while adding to the threat of print. “The ad spend data in our report is showing an acceleration in growth throughout 2024, which builds up to an impressive 5.5% year on year increase in Q3 thanks to a number of major sporting events happening then," Will Swayne, global practice president of media for Dentsu, told Adweek. Rival media agency business GroupM has forecast at $889 billion (+5.8%), excluding U.S. political advertising for this year, with a deceleration of growth to 5.3%. It also predicts growth in revenue (excluding U.S. political advertising) of 5.6% to $1.2 trillion by 2028. "We had been expecting more of a deceleration into the future. We’re now looking at innovation through AI and the digitalization of these channels that has pushed us to expect a bit more stable than more sharply decelerating growth,” said Kate Scott Dawkins, president of GroupM's business intelligence unit. GroupM’s forecast included an expectation of continued low unemployment rates, business funding, and the availability of venture capital investment and business creation, with the U.S., India and Germany seen to be on the rise in that respect. It also expects that digital spend, including across YouTube, TikTok, connected TV and digital out-of-home, will be higher than expected, up to 9.2% as opposed to the previously forecasted 8.4%. By 2028, pureplay digital is expected to be larger than the value of the entire advertising industry in 2022, with growth expected to reach 75.5% over the coming five years. The top advertising sellers from the last six years: Google, Meta, Bytedance, Amazon and Alibaba, have grown by 25.4% over that period. Growth, excluding those players from platforms such as Spotify and Walmart, was found to be just 0.6% each year, showcasing where the majority of digital advertising spend is being directed. This has meant declines in media spending in areas such as broadcast TV and print. Retail media, which added more than $10 billion to generate around $119.4 billion in revenue this year, should grow by 8.3% next year, with the U.S. and China expected to represent 77.6% of the global market by revenue. Dentu’s report, which is based on the top 12 markets that represent 86.7% of global spending, believes that The Americas, with 46.9% share of global ad spend, will have the largest growth next year at 5.8% to $353.1 billion, followed by Asia-Pacific (32.0% share) at $158.7 billion with 4% growth, and EMEA (21.1% share) with 2.7% growth to $240.9 billion. Two sectors expected to experience the highest growth as travel and transport (+7.5%), with an anticipated rise in flight schedules, and pharmaceutical (+7.4%), with increasing focus on health post-pandemic. It believes that digital ad spending will increase by 6.2% to reach $442.6 billion, with further growth of 6.3% over the next three years, capturing 60% of global ad spend as a result. TV ad spending will climb by 2.9% next year as well. With the number of hours spent viewing streaming channels growing over the last three years, the average number of hours U.S. audiences will view ads will drop by 17% by 2028, based on the assumption that 30% of all CTV viewing time is ad-free during that period, according to GroupM. Elsewhere, industry analyst and former GroupM advisor Brian Wieser has predicted that U.S. ad industry revenues (excluding political advertising) will climb 5% to $363 billion in 2023 and rise another 4.3% in 2024.