Breaking Down the Latest Global Ad Spends Report: Key Insights and Trends

Here's a summary of the key points from the new forecast on global ad spending from media investment group GroupM (WPP) & Magna (IPG)

Global Ad Spending Growth Projection:

• Growth in global ad spending is expected to slow to 5.3% in 2024 from 5.8% in 2023, excluding U.S. political advertising.

• Global ad spending, excluding political activity, is expected to reach $889 billion in 2023 and is projected to increase to $936 billion in 2024.

• Both reports report India as the fastest growing advertising market, growing at 11% in 2023 and projected to grow at 12% in 2024.

Factors Affecting Growth in 2024:

• Potential adverse effects from high-interest rates on consumer and business spending in the US and Europe.

• The influence of China-based companies, which have been significant contributors to international advertising growth, may diminish in 2024 due to its internal economic challenges along with changes in U.S. household savings and potential economic contraction in Europe.

• The rising middle class and robust economic growth has contributed to the high growth rate in India.

• Beyond the above 2024 will see a surge in governmental and political advertising as elections are scheduled in three large democracies US, India & Mexico.

Some market shifts to take note off :

Direct to Consumer	Sense of community	Artificial intelligence
Advertisers are banking on a more direct relationship with their customers. Using digital tools, this disintermediation of customer marketing allows for more personalised messaging with consent.	As increasingly interactions are becoming more customised and algorithmically driven, brands are leaning into shared experiences and live, fan-based events as something that can create a sense of community.	will permeate products, services and operations at all companies and will be an integral part of their operations.

Channel Mix – The Digital Dominance:

Digital	The digital channel drew approx. 70% of the global ad spends, it grew at 10% in 2023. The projections of both GroupM and Megna show a slow down by 1~2% in 2024.
	The advertising growth is concentrated in major digital players, the top five global sellers of ads
Retail Media	Retail Media is the fastest growing segment within digital, forecast to grow 8.3% in 2024. Revenue in 2023 is estimated to be $119.4 billion as per GroupM. Magna projects a 20% growth in retail media spends in 2024
Search	Largest segment in the digital ad revenue in 2023 growing at 7.8%, projected to slow down to a 6.2% increase in 2024. This slowdown is potentially fuelled in part by increased interest and competition in the sector following the integration of generative AI in search results and the growth of Retail media
Digital Video	Digital Video will continue to grow to settle close to 44% of traditional TV's ad spends (USD 70bn as per Magna's report)
Social Media	Social media spends will continue to have a robust growth on the back of short form video driven by Meta, Tiktok, YT & Twitch.(USD 182Bn - Magna)
Television	Total TV ad revenue will remain roughly flat over the next five years, growing just 1.1% on a compound annual basis. This growth is coming primarily from CTV, which is expected to grow 9.5% on a compound annual basis.
Print	Print including both traditional and digital forms of newspapers and magazines, is expected to decline 4.6% in 2023 and 3.1% in 2024. Digital extensions of news are forecast to make up 42.4% of total news ad revenue in 2024

Key industry categories contributing to global advertising:

CPG	​Automobiles	​Luxury
The largest advertising category with a 19.3% contribution of the global adex. Expectations are media and communication investment to continue despite receding inflation, as strategically investments in media have being having a positive effect.	New launches, particularly in the EV category, will also drive ad spends. Contributes 4.8% of the ad ex	​Sales of luxury retailers has rebounded after the lockdown in 2020. The focus of the retailers have been towards influencers, CTV and social videos. Contributes 2.2% of the ad ex and expected to hold onto its share in 2024
Technology	​Media & Entertainment	Pharma
Tech companies were updating their products and services to meet the challenges and opportunities of the new AI economy	Hyper competition forcing companies to embrace DTC models. The focus will remain on proven IPs and sports content in 2024. Some headwinds will be faced due to lower than usual volume of US shows and movies being released due to Hollywood strike. The sector expected to hold onto its 7.4% share of the ad ex.	Pharma marketing with continue to grow, driven by population ageing & new drugs being launched.
Government & Political Advertising
2024 will see a surge in governmental and political advertising as elections are scheduled in three large democracies US, India & Mexico.

My take : A challenging year for the global advertising business given the weak macro economic indicators, and political unrests. Bright spots being the major events scheduled for 2024 - Elections, Olympics & Euro 2024.