- Global ad spending is on course to close out 2023 on a positive note, a finish that comes despite a difficult period marked by inflation and conflict, according to newly updated forecasts from WPP’s GroupM and Interpublic Group’s Magna.
- GroupM foresees global ad revenues climbing 5.8% this yr to hit $889 billion, excluding the consequences of U.S. political promoting, with 2024’s momentum decelerating barely to 5.3% growth. Magna believes ad revenues will tick up 5.5% this yr to $853 billion after which jump 7.2% in 2024, a sunnier outlook.
- Both media investment agencies identified strengths in pure-play digital channels, or media that doesn’t function an extension of traditional formats like TV or out-of-home. That said, more brand strategy could revolve around shared experiences as consumer habits grow to be algorithmically dictated.
The global ad market seems to be staying on a stable track as 2023 enters its final stretch, a turnaround from a rocky first half and a positive sign for CMOs planning for the brand new yr. Still, marketers will likely remain cautious within the months ahead amid intense conflict, including the Israel-Hamas war, and inflamed political tensions which have created a walking-on-eggshells moment with consumers.
Magna predicts that easing inflationary pressures and the return of major cyclical events, corresponding to the Olympics and a U.S. presidential election, will drive ad revenues up 7.2% to $914 billion in 2024. Traditional media owners, following a battering period that ended with revenues down 4%, might be buoyed by the recovery as brands seek mass reach and contextual relevance in these environments.
Pure-play digital, a breakout that encompasses every thing from social apps like TikTok to retail media networks, is forecast by the IPG-owned media investment arm to increase ad sales by 10.5% to $587 billion in 2023, accounting for 69% of all ad sales. The company believes digital pure play might be up 9.4% in 2024.
GroupM, which excluded among the impacts of political ad spend in its assessment, had a more reserved overall view. The WPP group foresees the digital pure-play category ending 2023 with 9.2% growth before slowing to 7.3% growth in 2024.
The globalization of brand name marketing, with firms looking abroad for fresh audiences, has benefited platforms that provide scale and helped consolidate power. The five largest global ad sellers grew 25.4% on a compound annual basis from 2016 to 2022, according to GroupM. Magna stated that just three platforms account for nearly half (49%) of worldwide ad revenues today.
A climbing level of digital sophistication and personalized marketing, with content and ads increasingly tailored by algorithms, has also created an atomized lifestyle for a lot of consumers and will lead brands to lean more into in-person, shared experiences, boosting the sports and events spaces, GroupM asserted. At the identical time, players across the industry will slap “artificial intelligence” on as many services as possible in the identical way they’ve for digital to keep pace with buzzy AI software like ChatGPT.
While the 2 media-buying agencies occasionally differed of their expectations, they were aligned around some clear winners. Retail media networks are one example. GroupM said that the channel, though still the smallest segment in its digital evaluation, will generate $119.4 billion in 2023 and expand those earnings by 8.3% next yr. Magna meanwhile suggested that retail media this yr will represent $124 billion in global ad revenues, or roughly 15% of the general market. Eighty-seven percent of retail media dollars are flowing toward keyword search-based formats, according to Magna. Outside of China, retail media now makes up nearly 1 / 4 (23%) of total search promoting.
Connected TV may even proceed to prop up the otherwise flagging TV sector, bolstered by an influx of streaming services running conventional commercials in the search for profit. Amazon Prime Video’s introduction of an ad-supported tier in January will prove to be a “game changer” for the ad-supported video-on-demand industry, per Magna.
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