The global ad agency giant Dentsu remains upbeat about the audio segment, despite what it says is a digital ad market that is reaching maturity in the marketing mix. Dentsu’s updated ad outlook for this year says audio ad spending will stay positive, growing 0.8% year-to-year with $35.6 billion in spending worldwide as its share of the overall advertising pie remains roughly five percent.
The outlook shows a divergence between on-air and online audio. Dentsu thinks over-the-air radio ad revenue will slip 0.1% in 2023 while online radio growth is forecast at 3.6%.
“Audio is also rapidly shifting to digital, with more people choosing to listen on devices like phones and smart speakers,” the report says. “This gives platforms a much greater understanding of both the audience and their consumption (when people listen, how long they listen) that they can use to monetize their content.”
In the U.S. specifically, Dentsu forecasts streaming audio will grow 3.3% to reach $8.3 billion this year. Looking further ahead, the total audio market is forecast to grow by 3.8% in 2024 to reach a 4.8% share of global ad spend.
Dentsu says 2023 will see digital advertising overall continue to grow, but in an uncharacteristic single-digit increase. It pegs digital ad growth at 7.8% this year worldwide, which would make it only the second single-digit increase in the last 20 years. It occurred earlier in 2009 when the financial crisis slowed ad investments, and in 2020 due to the COVID-19 pandemic. Looking ahead, the firm says single-digit growth in digital is expected to become the norm, with a fairly consistent dollar increase year on year for 2024 and 2025, against a backdrop of around 60% total market share.
Digital spend is expected to reach $424.3 billion by the end of 2023, accounting for 58.3% of all advertising spend. Emerging digital categories are expected to continue to experience high growth in 2023, such as retail media (+18.0%) and connected TV (+15.2%). The preference for programmatic buying is also rising, with advertising spend transacted programmatically forecast to increase by 14.4%, to reach a 71.4% share of digital spend in 2023.
From a channel perspective, the 2023 outlook is now showing a mixed forecast with perhaps, most notably, a drop within the television ad spend for the year. TV ad spend is now expected to fall by 3.1% worldwide, totaling $170.2 billion by end of year. Dentsu calls it a “temporary blip,” however, with positive growth forecast to return for 2024.
Except for print ad spending, which continues its decline (-4.8%), Dentsu says the other media channels are holding ground, with incremental year-on-year increases for out-of-home (+3.8%), and cinema (+2.1%) also part of the forecast.
Overall advertising investment is forecast to grow by 3.3% globally in 2023, according to the updated Dentsu outlook. It anticipates $727.9 billion will be spent worldwide by the end of the year.
The forecast includes a marginally lowered estimate for growth. When Dentsu issued its original 2023 outlook last December, it predicted 3.5% growth. It blames macroeconomic factors for lowering its topline number. And it cites media price inflation rather than increased advertising volume as the main driver for the gains. If inflation was factored out, it says ad spending would decline 0.6% this year.
“This does not mean everything is dark and gloomy,” CEO Peter Huijboom says in the report. “First, because we forecast ad spend growth will accelerate again in 2024. But most of all because the media landscape is investing in its reinvention.”
The U.S. specifically is projected to see a 2.6% increase to reach $300.6 billion or roughly four of every ten dollars spent on advertising worldwide. That is lower than the 3.8% outlook from December based on what Dentsu says has been a “soft start” to the year.
“Advertisers have been cautious with their media spend as they look to gain confidence in the economy and get a better pulse on consumer spending habits,” the report says. “Dollars are also shifting to non-measured media activities such as affiliate advertising.”
Analysts think 2024 will see the U.S. ad market recoup some of its losses in the digital, automotive and technology sectors. Overall, 2024 is expected to “pick up pace” and grow by 5.4% to reach $316.9 billion, the report says.
The global outlook, as forecasted by Dentsu specialists in almost 60 markets, is even more positive. It predicts ad spending is set to accelerate faster in 2024, increasing by 4.7% to reach $762.5 billion. That is being driven by major sporting events such as UEFA Euro Championship and the U.S. presidential election.