Industry forecasters’ ad spending optimism varies heading into 2024

Two major industry forecasters are out with their ad spending estimates for 2024, and both predict gains, led by the strong performance of retail media and digital. WPP’s GroupM anticipates 5.3% global growth in ad revenue next year as the market adjusts to inflation and global economic conditions, including the ongoing Israel-Hamas and Russia-Ukraine wars. IPG Mediabrands’ Magna is more optimistic, forecasting global ad revenue to increase 7.2% in 2024, according to Vincent Létang, executive VP of global market research. Both also still anticipate mid-single-digit growth in 2023, as lower unemployment rates are balanced out by higher interest rates curbing business investment. GroupM expects 2023 global ad revenue to grow 5.8% to $889 billion, excluding U.S. political advertising. Magna’s 2023 prediction is slightly more conservative, at 5.5% growth to $853 billion. Ad Age A-List & Creativity Awards Final deadline approaching for annual program Enter here GroupM’s slight deceleration in its growth forecast—5.3% in 2024, down from 5.7% in 2023—comes as the market adjusts to inflation and global economic conditions. GroupM anticipates the rate of growth accelerating in 2025, when the IMF expects global inflation to fall to 4.5%. Magna’s bullish forecast for 2024 continues an upward trend that began in the second half of this year. “As expected by Magna back in June, advertising spending re-accelerated in the second half of 2023 after four slow quarters from mid-’22 to mid-’23,” Létang said. “The recovery is driven by easier year-over-year comps and stabilizing economic conditions like inflation slowdown, and these improvements mostly benefit pure-play digital advertising formats.” Subscribe to Ad Age Sign up now for the latest industry news and analysis Click here In the U.S., Magna anticipates 3.6% growth this year, to $338 billion, excluding political advertising. GroupM announced a more robust prediction, now anticipating 5.7% growth in the U.S. for 2023, up from its June forecast of 5.1%. Retail media—the smallest segment in digital—is still seeing rapid growth and that’s where GroupM predicts the most change in the coming years. By 2028, GroupM expects retail media revenue to exceed linear TV and CTV combined. Retail media revenue is estimated to reach $119.4 billion in 2023, according to GroupM. That’s a downgrade from the company’s June estimate, due to economic factors in China. Magna, which took China out of its estimations for the future of retail media networks, estimates the segment to grow by 20% globally in the next year. As the markets normalize after a period of expansive growth, the U.S. and China are still expected to represent 77.6% of global retail media ad revenue in 2024, GroupM said. In 2024, GroupM expects the segment to grow 8.3%. Digital ad revenue will continue to see strong growth into 2024. GroupM expects the segment to grow by 9.2% globally for 2023 before decelerating to 7.3% growth in 2024. Magna’s prediction is rosier, calling for 10.5% growth in digital to $587 billion in 2023. Digital, Magna said, represented 69% of total ad sales in 2023, resulting from the growth of the largest ad sellers, including Meta, Google and streaming audio services such as Spotify. Kate Scott-Dawkins, GroupM global president of business intelligence, also attributes the growth in digitial to advertisers developing more direct relationships with consumers. “We saw this with media entertainment when they were directly reaching out to consumers to subscribe to their platforms rather than relying on broadcasters and cable distributors to advertise for them,” Dawkins said. For instance, the automotive industry, which saw growth in ad spend in 2023, according to both GroupM and Magna, has seen manufacturers increase their ownership of experiences with consumers. “Consumers come into their digital environments and then [manufacturers] can hand them over to a local dealer for a test drive or a service,” Dawkins said. Out-of-home has a more uncertain future. Magna predicts it to grow 7% globally this year to $32 billion, bringing it back to pre-pandemic market size. However, while GroupM expects the segment to grow 10.3% in 2023, the agency doesn’t believe it will reach pre-pandemic market size within the next five years. Excluding China, the largest out-of-home market from 2016 through 2021, GroupM expects out-of-home's share of the total ad market to hover around 4% through 2028.

Industry forecasters’ ad spending optimism varies heading into 2024

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