Dive Brief:

• Global ad spending is on track to close out 2023 on a positive note, a finish that comes despite a challenging 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 year to hit $889 billion, excluding the effects of U.S. political advertising, with 2024’s momentum decelerating slightly to 5.3% growth. Magna believes ad revenues will tick up 5.5% this year to $853 billion and then jump 7.2% in 2024, a sunnier outlook.  
• Both media investment agencies identified strengths in pure-play digital channels, or media that does not serve as an extension of traditional formats like TV or out-of-home. That said, more brand strategy could revolve around shared experiences as consumer habits become algorithmically dictated.   

Dive Insight:

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 new year. Still, marketers will likely remain cautious in the months ahead amid intense conflict, including the Israel-Hamas war, and inflamed political tensions that have created a walking-on-eggshells moment with consumers.  

Magna predicts that easing inflationary pressures and the return of major cyclical events, such as 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%, will be buoyed by the recovery as brands seek mass reach and contextual relevance in these environments. 

Pure-play digital, a breakout that encompasses everything 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 will be up 9.4% in 2024. 

GroupM, which excluded some of the impacts of political ad spend in its assessment, had a more reserved overall view. The WPP group foresees the digital pure-play category finishing 2023 with 9.2% growth before slowing to 7.3% growth in 2024. 

The globalization of brand marketing, with companies 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 global 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 many consumers and may lead brands to lean more into in-person, shared experiences, boosting the sports and events spaces, GroupM asserted. At the same time, players across the industry will slap “artificial intelligence” on as many products and services as possible in the same way they have for digital to keep pace with buzzy AI software like ChatGPT. 

While the two media-buying agencies occasionally differed in 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 analysis, will generate $119.4 billion in 2023 and expand those earnings by 8.3% next year. Magna meanwhile suggested that retail media this year will represent $124 billion in global ad revenues, or roughly 15% of the overall 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 a quarter (23%) of total search advertising.  

Connected TV will also continue to prop up the otherwise flagging TV sector, bolstered by an influx of streaming services running conventional commercials in the quest 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.