Marketers learned last week that global ad spending will top $1 trillion next year.
By Jay Bemis | Advertising Systems Inc.
In what has been a year of tight advertising budgets because of worries about inflation, businesses and marketers got what might be considered an early holiday gift last week.
WARC, in its annual Global Ad Spend Outlook report, projected that spending on ads worldwide will surpass $1 trillion for the first time in 2024. That will be an increase of 8.2% from the $963.5 billion that advertisers are expected to have spent once 2023 draws to a close, forecasters said.
A specialist information, data and analytics company that centers on insights particularly for marketers, WARC advises some 75,000-plus marketers in more than 1,200 companies and 100-plus markets around the world. It operates out of offices in the United States, the UK, Singapore and China.
When unveiling the $1 trillion-plus ad spending forecast, James McDonald, director of data, intelligence and forecasting for WARC, was upbeat that happy days, indeed, may lie ahead for the advertising sector.
“High interest rates, spiraling inflation, military conflict and natural disasters have made for a bitter cocktail over the preceding 12 months,” McDonald said. “But the latest earnings season shows that the ad market has withstood this turbulence and has now turned a corner.
“With the establishment of retail media as an effective advertising channel, the advent of connected TV as the next evolution of conventional video consumption, and the continued growth of social media and search, we are seeing once again the value advertisers place in leveraging first-party data to target the right message to the right person at the right time.”
Such major events as the U.S. presidential election, the Summer Olympics in Paris and the UEFA Men’s Euros tournament all will help boost the global ad spend in 2024, WARC said.
Chief Beneficiaries to Include Social, Retail Media
WARC foresees social media accounting for $227.2 billion of ad spending in 2024, or more than a fifth (21.8%) of the trillion-dollar total.
Meta, owner of Facebook, Instagram and Whatsapp, controls almost two-thirds of the social media market and can anticipate more than $146 billion in ad revenue in 2024, WARC said. TikTok owner ByteDance will gather nearly $40 billion in revenue, giving it a 17.6% cut of the total social media ad spend.
Retail media, meanwhile, will account for 13.6% of all ad spending in 2024 with a forecasted total of $141.7 billion. Amazon grabs the lion’s share of that channel, accounting for 37.2% of all retail media spending. It’s expected to pocket about $52.7 billion from ad spending for 2024.
In all, five companies — the aforementioned Meta, ByteDance and Amazon, plus Google-owner Alphabet and Chinese e-commerce giant Alibaba — will attract 50.7% of all global ads by the end of this year, growing their slices of the pie to 51.9% in 2024. Basically, while their ad revenues are expected to increase by 9.1% by the end of 2023 and by 10.7% in 2024, the rest of the ad industry will remain fairly stagnant.
But, as we’ve noted here recently, connected TV is one sector that is expected to keep growing — at a clip of 11.4% for the rest of 2023 and 12.1% in 2024 — for a total of $33 billion, according to WARC’s projections.
Linear or traditional TV spending will decline 5.4% in 2023, but it’s expected that 2024’s lineup of political and sporting events should then help that category grow 3.5% in 2024.
Which Countries Will Benefit the Most?
WARC in its report offered these additional insights about how the $1 trillion in next year’s global ad spend will affect different parts of the world:
- The United States is set to account for just under a third (31.3%) of global spend, with a forecast rise of 2.2% this year and a further 7.6% in 2024 to reach $326.7 billion.
- The Middle East is among the smallest regions, at just 0.7% of global spend, but is anticipated to be the fastest-growing over the forecast period, with spend up 10% in 2023 and 6.2% in 2024.
- South Asia is also growing rapidly (+8.9% this year, +12.1% next year), buoyed by a strong Indian market. Ad spend in India is forecast to grow by double digits over the next 18 months to reach a total of $13.7 billion in 2024.
- • Advertising spend in Europe is set to rise just 0.6% this year, before the rate of growth increases to 3.6% in 2024. The UK — the largest single ad market in the region with a 4.6% share — will see a dip of 1% in ad spend this year when measured in U.S. dollars.
