According to GroupM’s This Year Next Year 2023 Global end-of-year forecast, the global advertising market remained on pace for 5.8% annual growth, despite inflation, high interest rates, China’s sluggish economy and lingering impacts from the pandemic. The report further unveiled that the nominal growth will decelerate in 2024, however the five-year outlook remains strong with retail media and digital out of home poised for aggressive expansion.
The forecast reveals that the three major shifts happening in the advertising industry include direct-to-consumer, sports and event, and artificial intelligence. As per the report, advertisers including those enlisting the expertise of agencies, are drawing on deeper and often more direct relationships with their customers. This is especially true of the automotive, media and entertainment sectors, disintermediating customer marketing and allowing for more personalised messaging. However, in the face of atomisation of an individual’s day-to-day experiences, where their entertainment, search and shopping recommendations, and even their news digest, is increasingly customised and algorithmically driven—brands are leaning into shared experiences and live, fan-based events as something that can create a sense of community.
Furthermore, just as every business is now a ‘digital’ company, the same will soon be true of artificial intelligence (AI), especially in the world of advertising. Artificial intelligence will permeate products, services and operations at all companies, even if early benefits accrue primarily to those technology providers developing large language models and supplying the compute needed to train and query them.
Moreover, the report highlights that digital excluding the digital extensions of traditional media such as CTV and digital out-of-home (DOOH), but including YouTube and TikTok—will finish the year up 9.2% before decelerating to 7.3% growth in 2024. However, retail media is adding more than $10 billion in revenue in 2023 and forecast to grow 8.3% in 2024. Revenue in 2023 is estimated to be $119.4 billion. While out-of-home (OOH) is forecast to grow 10.3% in 2023, although it will not surpass 2019 levels until 2024 and, as it stands currently, is not expected to regain its pre-pandemic share of total ad revenue even by 2028.
Meanwhile, the second largest segment in the digital ad revenue bucket, Search, is expected to reach nearly $200 billion in revenue in 2023, growing 7.8%. This will be followed by a 6.2% increase in 2024, potentially fueled in part by increased interest and competition in the sector following the integration of generative AI in search results. Furthermore, Total TV ad revenue will remain roughly flat over the next five years, growing just 1.1% on a compound annual basis. This growth is coming primarily from CTV, which is expected to grow 9.5% on a compound annual basis to $45.8 billion in 2028. Linear TV will see a -1.3% CAGR through 2028.
In addition to this, Audio ad revenue, including streaming audio, will total $26.4 billion in 2023 (a decline of 2.9% compared to 2022) and is forecast to grow just 0.4% in 2024. The channel represents 3.0% of total ad revenue, excluding U.S. political spend. Print, including both traditional and digital forms of newspapers and magazines, is expected to decline 4.6% in 2023 and 3.1% in 2024. Digital extensions of news are forecast to make up 42.4% of total news ad revenue in 2024 compared to 29.5% for audio. While Cinema ad revenue is forecast to grow 14.7% in 2023 before decelerating to 3.4% in 2024. Total revenue for the channel is expected to pass $2.2 billion in 2024, although there is no expectation for the channel to surpass 2019 levels ($3.0 billion) within the next five years.
The forecast further unveils that the main industry categories contributing to global advertising includes consumer packaged goods (CPG) with 17.9%, automotive with 4.8%, luxury at 2.2%, technology with 5.5%, media and entertainment at 7.4% and digital endemics with 10%.
When it comes to the top 10 markets, the U.S. and China retain their positions as the two largest ad revenue markets, respectively, the U.K. has overtaken Japan for the third spot. Germany and France maintain their rankings, with Canada moving back from seven to nine, Brazil rising from eight to seven, and India climbing from nine to eight. Australia remains the tenth largest market for ad revenue.
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