U.S. ad industry revenue is expected to jump 5% to $363 billion in 2023, and rise another 4.3% in 2024, excluding political advertising spend, according to a report from industry analyst Brian Wieser.

Including political advertising, with the upcoming 2024 U.S. presidential election, ad revenue is expected to increase 8.1% next year, per the report. Political advertising is expected to hit $17 billion in 2024, an increase from the $14 billion reported during the 2020 U.S. presidential election, per the report from Wieser, principal and founder of media and ad consultancy Madison and Wall.

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Wieser’s report predicted advertisers will continue to invest more in retail media, commerce and other forms of digital advertising where performance has taken off, as well as out-of-home campaigns, where advancements in artificial intelligence are revamping the space and direct-to-consumer brands invest heavily. Certain traditional forms of media including linear TV, print publishing and direct mail will continue to be pressured, the report said.

Wieser wrote that there’s been a lot of baseless concern of a recession, which has caused pockets of agency layoffs and marketers in certain categories including auto and tech to be cautious with their ad spend. As it relates to ad revenue, Wieser wrote that he expects there to be “a reversion back towards the lower end of mid-single digit levels, which should be considered normal, positive conditions for the industry,” coming off of a “period of massive expansion during the pandemic” in 2020.

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“It could be considered a positive that the industry didn’t fall faster, or even decline over the past year and a half, especially as much of the industry seemed to try to talk itself into a downturn last year by fearing for a recession that never came,” Wieser wrote. “I would argue such an outcome was never even likely to occur in the first place given the vast stores of savings for wealthier consumers and significant disruptions to labor markets which empowered workers—including those with lower wages—to secure higher levels of compensation.”

Even the rise in inflation should boost the overall ad market, Wieser argued.

“Most marketers I have studied manage their budgets for advertising on a percentage-of-revenue basis,” he wrote. “Higher revenue, whether driven by higher prices or higher volumes, should almost always lead to more spending on advertising, unless there is a meaningful decline in underlying economic growth.”

Ad revenue is expected to normalize in the range of 4% to 5%, excluding political advertising, on a quarterly basis in 2023, per the report.

Areas on the rise

Digital advertising continues to rise in importance for marketers looking to better boost and track the performance of their ad dollars.

What the report called “Internet/Digital Platforms”—a category including search, social media, commerce, retail media and other digital platforms such as YouTube, Yahoo and Apple—is expected to account for 64% of all advertising spend in 2023 and nearly 67% by 2024. The report predicted digital platform-focused companies to collectively grow by 11% in 2023.

“Perhaps unsurprisingly, commerce media [and] retail media is a stand-out sector, set to account for approximately $42 billion in advertising revenue during 2023, up 20% from 2022 levels,” Wieser wrote.

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Amazon continues to be the dominant player in the commerce and retail media space but “companies such as Walmart, Instacart, Ebay, Uber, Criteo, Booking.com and Expedia have all built significant businesses which are collectively well-positioned to sustain double-digit growth for many years to come,” he wrote.

Even political advertisers, which have historically invested more in traditional forms of marketing, will lean more into digital advertising, the report predicted. “Internet-related advertising has become increasingly important, and as this category continues to grow, its year-over-year skews to growth rates will become increasingly evident,” Wieser wrote.

Outdoor advertising is another area poised for growth, as people are increasingly getting out and about following the height of the pandemic. Wieser predicted this as the only “traditional” media expected to grow in 2023.

“Outdoor advertising has essentially rebounded back to pre-pandemic levels,” he wrote. “Arguably led by technology-focused companies such as Apple and luxury marketers, it was already the case that prior to the pandemic outdoor advertising was lauded for its experiential qualities. In a world where television looks significantly less attractive, outdoor advertising probably looks even better by comparison.”

Channels in decline

TV is facing “what might feel like an existential crisis at the moment,” Wieser wrote, as investment continues to decline in linear TV in favor of streaming platforms, despite these  “likely to always be ad-free or ad-light at best,” he wrote.

Hurting the category are factors including the Hollywood strikes, which are decreasing the availability of inventory for marketers, and Charter Communications’ ongoing carriage dispute with The Walt Disney Co., which has Disney channels booted from the cable giant’s Spectrum service.

“While it’s possible that most network owners and most carriers will continue to come to terms for carriage agreements as they have for many decades,” Wieser wrote, “and that cord-cutting then continues at ‘only’ a high single digit level, it’s also plausible that deals won’t be reached, in which case those consumers who want access to the channel packages they have today will have to subscribe to over-the-top virtual [multichannel video programming distributors] such as Fubo, Alphabet’s YouTube TV, Dish’s Sling or—ironically—Disney’s Hulu+ Live, who may be more tolerant of the lower profit margins that these platforms are built to manage around.”

And, of course, consumers continue to switch to streaming platforms, but the ad inventory for which will likely never reach linear TV levels, according to Wieser.

More: Advertisers aren’t moving to streaming as quickly as viewers

Still, political advertising investment in local TV should sustain the business in the near term, Wieser wrote, and there is opportunity for network owners that redefine what they have historically sold to marketers.

“To the extent that they can capitalize on what are still-sizeable relationships with marketers to offer a wider array of media products,” Wieser wrote, "for example, by creating common identifiers that allow for integrated sales of traditional TV, streaming video and other digital inventory—I think there are opportunities for growth ahead.”

Publishers will continue to face pressure. In the coming years, profit margins for the publishing industry are expected “to be far below where they were in a world where content-less classified advertising provided support to the sector,” Wieser wrote.

While Wieser predicted digital publishing ad revenue to “fare relatively better than print, the weight of legacy businesses and disinvestment in the production of content will serve as a drag on the sector, with mid-single digit declines likely to occur in coming years.”

Direct mail is also expected to continue to decline, despite its effectiveness.

“My general view is that this is occurring more out of ‘fashion’ than anything else,” Wieser wrote. “I suspect direct mail can still be as effective as it ever was, and probably more effective than many other forms of media.”

Growth in audio advertising is forecast to remain flat over the next few years, according to the report, as the declines in radio is offset by some gains in podcasts, which is helping attract more national advertisers.

“At the same time, growth will remain limited because the smaller advertisers who historically dominated radio generally continue to have easy access to more scalable alternatives, such as the large digital platforms,” Wieser wrote.

Read more: Audio ads outperform video for attention, study finds