Major media agency GroupM says global ad revenue in 2023 will come in at about $889 billion, with year-over-year growth of 5.8% matching the company’s mid-year estimates.
The tally, which excludes political spending because of its highly cyclical nature, is expected grow at a slower rate of 5.3% in 2024 due to inflation and other macroeconomic factors.
Spending overall in 2023 has benefited from a surge in digital spending. “Pure play” digital advertising, a category including YouTube and TikTok but not counting connected-TV and digital out-of-home, will end 2023 up 9.2% over the prior year, exceeding GroupM’s prior expectation of an 8.4% gain. By 2028, pureplay digital will be larger than the entire advertising industry was in 2022, the company said.
Connected TV continues to climb as streaming gains ever-more clout, and the category is expected to grow 13.8% in 2024 compared with this year.
Sports programming is increasingly a magnet for ads across streaming or linear TV, and is winning an increasing share of total viewing. Sports accounted for 23.5% of all viewing hours this year, up from 14.1% in 2018, GroupM said. “Sports is one thing that continues to bring a community experience, a shared experience,” Kate Scott-Dawkins, GroupM’s global president business intelligence, said during a press briefing.
The U.S. and China remain the two largest markets in terms of ad revenue, in that order, but the UK leapfrogged Japan to take the No. 3 spot, largely due to the weakening of the Japanese yen over the last six months.
Media companies like Warner Bros. Discovery and Paramount Global have reported softness recently in their ad businesses, which has raised alarms among some investors. Traditional media players are all managing decline in linear TV viewing and advertising, while at the same time mounting streaming businesses whose economics look quite different from those of the legacy TV business. The volume of advertising is shrinking, though, which raises questions about pricing and strategy moving forward. Since the beginning of 2021, streaming has increased its share of advertising across the combined linear and streaming market to 46% from 34.5%.
With smaller ad loads and many consumers remaining in ad-free subscription plans, if 30% of overall connected-TV viewing is ad-free over the next four years, the average number of total ad hours would drop 17%, GroupM estimates.
