Total net advertising revenues worldwide will reach $853 billion this year, a 5.5% hike above the 2022 level, and will leap 7.2% in 2024, according to the winter update of Magna’s Global Ad Forecast. Ad spending accelerated in the second half of 2023 to grow by 6.3% year over year, following a weaker first half that saw ad billings build by 4.7%. U.S. ad revenues improved 3.6% to $338 billion this year, with most traditional media, including audio, trending down.
Traditional media owners – TV, audio, publishing, and out-of-home – are “typically vulnerable during this slow, uncertain macro-economic climate,” Magna says in the update released Sunday (Dec. 3), with traditional media ad revenues shrinking by 4% to $266 billion in 2023.
Magna says global TV ad revenues are shrinking by 6% this year to $158 billion, while publishing ad sales drop by 5%, audio media dips 2% to $29 billion, and out-of-home keeps growing by 7% to reach $32 billion, putting it back where it was pre-COVID.
Digital pure-play media owners ad revenue, on the other end, grew by 10.5% to $587 billion, accounting for 69% of total ad sales. Digital pure-play ad sales are driven by organic growth factors including the rise of ecommerce and retail media.
Magna’s analysis of 2023 media owner revenue trends finds keyword search remains the most popular ad format, approaching the $300 billion milestone this year, rising 9% to $298 billion. Social media behemoths like Meta and TikTok hit the gas again to grow 15% to $182 billion, while short-form pure-play video platforms such as YouTube and Twitch grew by 9% to $70 billion.
U.S. Market Improves 3.6%
Homing in on the U.S. ad market, Magna says ad revenues improved 3.6% to $338 billion this year. Breaking out the U.S. market by media type shows national TV declined 6%, local TV tumbled 22%, audio declined 4%, publishing was off 7%, out-of-home grew 2%, search jumped 10%, and social vaulted 14%. The U.S. audio ad market improved in the second half, registering a 3.3% decline after a steeper 3.8% drop in the first half of the year. That improving trend will continue into 2024 with Magna predicting 0.4% growth for audio ad sales in the U.S.
Non-cyclical ad revenue is up 5.4% in 2023 and will accelerate to 5.9% in 2024. That becomes 8.4% growth when including cyclical ad spend, including almost $10 billion in political spending.
Looking ahead to 2024, the combo of economic stabilization, lower inflation, digital innovation, and the return of major cyclical events such as elections and international sports events, will propel global ad spend up 7.2% to $914 billion, and up 8.4% in the U.S. Traditional media revenues will recover and show 2.2% growth while digital pure players ad sales will increase by 9.4%.
Hot Categories
Magna predicts automotive, travel, and pharma will be among the fastest-growing ad categories next year. Consumer packaged goods and fast moving consumer goods will benefit from lower inflation, retail media opportunities and sports events. On the other hand, entertainment marketing may suffer from the lower-than-usual volume of U.S. shows and movies being released.
“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,” said Vincent Létang, Executive VP, Global Market Research at Magna and author of the report. “The recovery is driven by easier year-over-year comps and stabilizing economic conditions (inflation slowdown), and these improvements mostly benefit pure-play digital advertising formats. Search formats are driven by retail media; Social and Video formats recover to double-digit growth thanks a better monetization of the fast-growing short vertical video impressions.”
Létang says traditional media ad revenues, including their digital ad sales, are down by 4% this year, with TV down 6%. “The cyclical events of 2024 (sports, elections) will make reach media and contextual advertising attractive again and stabilize traditional media owners ad revenues,” he says with overall traditional media growing 2%, and TV up 3%.