- Global promoting spending in 2023 is predicted to grow 5.9% for a complete of $874.5 billion, a figure that excludes U.S. political promoting projections, in line with the most recent full-year forecast from GroupM.
- The WPP media agency painted an industry at an “inflection point” with pandemic trends cooling, digital leveling off and other levers of growth maturing. The firm said its underlying growth forecast over the following five years shall be within the mid-single-digit range.
- There are recent uncertainties that might change the landscape, including the rapid rise of artificial intelligence (AI). GroupM expects AI to “inform,” or impact indirectly, a minimum of half of all promoting revenue by the tip of this 12 months, and cautioned that marketers should be deliberate with their bets on the tech.
Six months into 2023, GroupM is holding firm with its full-year ad spending projections, reiterating a 5.9% growth figure from December. The upshot is that marketers ought to be prepared for a return to “some form of normalcy” within the second half and waiting for 2024 despite shifting consumer habits and ongoing inflationary pressures, in line with the agency. The International Monetary Fund believes the worldwide inflation rate will drop to 7% in 2023.
Pureplay digital ad revenue will tick up 8.4% to represent 68.8% of 2023’s total, in line with GroupM, with that share estimated to expand to 74.4% by 2028. The firm noted that digital’s trajectory has cooled to a single-digit percentage rate, with the pandemic-driven boom petering out. However, it suggested the slowdown might be more a mark of the channel’s relative scale and maturity moderately than a recessionary indicator.
Beyond some leveling off, the promoting industry has undergone other changes for the reason that end of 2022. ChatGPT has ushered in a wave of generative AI hype that has dominated headlines and turn into an investment driver in an otherwise sagging tech sector. AI is primed to reshape key pillars of the web economy, including search and social promoting, bringing with it opportunities but additionally risks for brands.
Generative AI’s emergence has buoyed interest in broader applications of automation in ad tech, creative and media. GroupM now foresees the AI craze touching a minimum of half of all promoting revenue indirectly by the 12 months’s end. Agencies have positioned themselves as vital strategic partners for clients attempting to navigate where AI can practically profit their business while avoiding pitfalls.
“Advertisers on this environment shall be well-served by having proactive guidelines and the appropriate partners to navigate these waters in order that selections in budget allocation and the usage of AI are made intentionally with the long-term health of the business in mind,” GroupM stated in its report.
While the true impact of AI continues to be up for debate, other channels have further enshrined themselves within the on a regular basis habits of consumers and advertisers. Connected TV (CVT) is predicted by GroupM so as to add 10.4% in ad revenue between 2023 and 2028 on a compound annual basis. CTV revenue in 2023 will land at around $25.9 billion, a 13.2% year-over-year gain.
Netflix and Disney have recently introduced ad-supported streaming tiers, while Amazon is reportedly mulling an analogous option for Prime Video. Consumer spending on such subscriptions stays relatively small in major markets, which indicates that streaming platforms still have room to grow on this area, per GroupM. Meanwhile, global TV ad revenue will dip 1.2% to $133.6 billion in 2023, excluding U.S. political ad spending.
Retail media also stays a magnet for brand budgets as verticals like consumer packaged goods attempt to link their campaigns closer to the purpose of sale and contend with the death of third-party cookies. The channel is the third fastest-growing behind CTV and out-of-home and can represent 14.4% of total promoting revenue in 2023.
Accurately gauging retail media growth will be tricky since few retailers are forthcoming with their ad sales. Still, GroupM foresees retail media revenue exceeding that of TV and CTV by 2028. The agency has recently updated its definition of retail media to encompass ad revenue from last-mile delivery services.
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