Global ad spending on track to top $1T for first time, WARC says

Dive Brief:

Global advertising spending will grow 4.4% in 2023 and another 8.2% in 2024, which will push the total to over $1 trillion in spending for the first time, according to WARC’s Global Ad Spend Outlook 2023/24. The growth will be led by social, retail media and connected TV.
Five companies — Alibaba, Alphabet, Amazon, ByteDance and Meta — will attract 50.7% of global spending in 2023 and 51.9% in 2024. Their ad revenues are expected to increase by 9.1% in 2023 and by 10.7% in 2024, while the rest of the industry remains stagnant.
Bolstered by the upcoming presidential election and attention-grabbing sporting events such as the Olympics, the U.S. will account for almost a third of the total ad spend, rising 2.2% to $303.6 billion in 2023 and 7.6% to $326.7 billion in 2024.

Dive Insight:

Lingering macroeconomic concerns will not be able to hold back ad spending in 2024 amid a confluence of attention-grabbing events, including the U.S. Presidential election, the Olympics and the UEFA Men’s Euros tournament, according to WARC. Combine that with improved trading conditions, particularly in China, and the industry could be poised for some record-breaking years.

“High interest rates, spiralling inflation, military conflict and natural disasters have made for a bitter cocktail over the preceding 12 months, but the latest earnings season shows that the ad market has withstood this turbulence and has now turned a corner,” said James McDonald, director of data, intelligence and forecasting for WARC, in a release.

“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,” McDonald continued.

WARC’s forecast suggests social media will account for $227.2 billion of ad spending in 2024, more than a fifth (21.8%) of the total spend. Meta, which owns Facebook, Instagram and Whatsapp and controls almost two-thirds of the social media market, can expect to see more than $146 billion in ad revenue, followed by TikTok owner ByteDance, which will see just under $40 billion in ad revenue (equating to a 17.6% share).

Similarly, retail media will continue to expand, with channel spending expected to rise 10.2% in 2023 and 10.5% in 2024. In 2024, retail media will account for 13.6% of all ad spending for a forecasted total of $141.7 billion. Unsurprisingly, Amazon is expected to dominate the channel, accounting for 37.2% of all retail media spending (about $52.7 billion). Meanwhile, Alibaba will lose ground in an increasingly competitive Chinese market, which will include Pindoudou (14.4% of global retail media spend in 2024), JD.com (9.9%) and Meitaun (3.7%).

Connected TV (CTV) is expected to grow 11.4% in 2023 and 12.1% in 2024, reaching a total of $33 billion. While that is only 3.2% of all spending, it will account for 16.2% of combined CTV and linear TV spending. The data suggests media owners of both linear and connected TV will be competing with each other for existing TV budgets, rather than taking share from other channels. As a result, linear TV spending will decline 5.4% in 2023. However, political and sporting events should reinvigorate the category to grow 3.5% in 2024. Regardless, linear TV is still the world’s third-largest advertising medium, accounting for 15.6% of global advertising spending in 2024.

Search will remain the second-largest advertising channel increasing to $229.2 billion in 2024, equivalent to 22% of all advertising spending. Despite indications that it is losing ground, Google will command 83.1% of the search market in 2024, equal to $190.5 billion in ad revenue. China’s Baidyu will see its share drop to 6.5%, while Bing’s share of the search market will hold at about 6%.

Among the categories, financial services will be the fastest growing sector, increasing by 11.5%, followed by technology and electronics (+11.3%) and pharma and healthcare (+11%). CPG categories — including food, household & domestic, nicotine and soft drinks — will also see growth into 2024, with a greater focus on retail media platforms.