Global advertising spending will end 2023 with a 5.8 percent gain to $889 billion, before slowing to a 5.3 percent lift to $951.8 billion next year, excluding political ad spending, said ad media giant GroupM forecast on Monday.
Political ad spending is expected to reach $15.9 billion in 2024, which is forecast as a possible new record. For the U.S. market, ad revenue growth is expected to reach a 5.7 percent gain in 2023, before falling to a 4.1 percent gain next year, when excluding political ad spending.
China will see 6.1 percent ad revenue growth this year, against a forecast 4.7 percent gain in 2024, as the overall economy continues to shrink and property market concerns and youth unemployment weighs on the minds of consumers.
Rival MAGNA’s latest predictions forecast global media owners will see advertising revenues reach $853 billion in 2023, up 5.5 percent over 2022 levels, and will see growth by 7.2 percent in 2024.
The way GroupM forecasters see it in their latest ad industry global year-end survey, digital platforms like Google and Meta are squarely challenging traditional media players like linear TV channels for dominance in the global ad-spending space.
And they’re winning.
Currently, nearly 70 percent of global advertising revenue goes to digital platforms, a figure expected to rise to 75.5 percent by 2028. The top five global sellers of advertising — Google, Meta, Bytedance, Alibaba and Amazon — using artificial intelligence and going direct to consumers to record 25.4 percent in compound revenue growth on an annual basis from 2016 to 2024, GroupM indicated.
During the same period, traditional media owners and the biggest marketers and ad agencies saw their own compound revenue growth at only 0.6 percent. That’s anointed global digital giants, including TikTok and YouTube, as the new champions of the advertising game, with the U.S. and China remaining the two largest world markets when it comes to ad revenue.
“… We seem to have reached a significant inflection point in the realization that linear TV is well and truly in decline, growth in advertising is dominated by a handful of large media and commerce companies and the economics of this industry are predicated on this new world order, where large advertisers and agencies make up a minority of revenue for some of their largest partners,” the GroupM forecasters argued.
Globally, total TV ad revenue over the next five years is estimated to grow by just 1.1 percent on a compound annual basis. That growth will come mainly from connected television or Smart TVs over the traditional cable connection, expected to grow 9.5 percent from $29.2 billion in ad revenue in 2023 to $45.8 billion in 2028.
Linear TV, by contrast, will continue to see a slide in ad revenue through to 2028 when pure-play digital ad revenue is forecast to be larger than the entire advertising industry was in 2022, according to GroupM. The advertising spend going to ad-supported streaming services is growing and GroupM sees the tipping point when their ad revenues outweigh those coming to traditional medial channels in 2026.
Given linear TV channels have more advertising minutes per hour than ad-supported streaming platforms, GroupM sees a 17 percent decline in average per-hour TV advertising coming in four years.
For MAGNA forecasters, digital pure-play media will similarly outpace traditional media owners, which will see their own ad revenues shrink by 4 percent to $266 billion in 2023. Digital media owners by contrast are expected to see their ad revenue grow by 10.5 percent to $587 billion, or 69 percent of total ad sales, in 2023.