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U.S. Ad Spend To Grow 9% In 2024, Driven By Digital.


U.S. ad spending will strengthen in 2024, driven by growth in both digital and linear media, according to an updated forecast from MoffettNathanson. Total ad spend is expected to grow 9% next year, compared to just 3% in 2023. The drivers are continued double-digit growth in digital and 4% growth in linear media, due in large part to mountains of ad dollars pouring in from political and Olympic spending.


Looking back on the year that’s quickly heading to the exit ramps, the MoffettNathanson Ad Tracker says total U.S. advertising, including retail media, re-accelerated to 7% growth in third quarter 2023 to reach $69.49 billion. This comes after 2.7% growth in Q2 and after remaining flat in the first quarter. The growth tilted heavily to digital. When subtracting digital ad dollars from the comparison, advertising declined 10.8% in Q1, -8.7% in Q2 and -11.5% in Q3.


Total TV advertising, excluding advertising-based video on demand (AVOD), tumbled 16% year-over-year in Q3 due to weak ratings and pricing. Cable networks declined 13%, while broadcast TV was down 10%. TV stations plummeted 25% and declines at cable multiple systems operators (MSO) plunged 19% due to the weaker underlying market and the start of difficult political comparisons. AVOD advertising grew 12% in Q3.


Broadcast radio held up a little better in the third quarter than TV, dropping 11.5% to $1.46 billion from $1.65 billion in Q3 2022. Meanwhile, online ad growth accelerated to +11% from +4% in Q2 while retail media grew by +26% in the quarter.


Retail Media Matures


The investment firm’s advertising forecasts now include retail media, which is on track to grow 17% in 2024 after explosive 24% growth to $42 billion in 2023. Layering in retail media dollars lowered its 2023 total U.S. ad growth forecast to 3% growth from 4% growth (since retail media growth is slowing down) but raised its estimate on a pure dollar volume basis to $338 billion from $319 billion.


“Today’s end-of-aisle display is a banner ad on Amazon, and prominent shelf space is an Amazon search ad – Amazon, as we shall see, is a big player in this space,” the firm says in its freshly published “U.S. Advertising & Ecommerce: Squaring the Retail Media Circle.”


On a global basis, retail media generated $64 billion in ad revenue, accounting for 14% of digital ad spend. Amazon and Walmart dominate the category. While some of the dollars are emanating from non-advertising buckets in marketing budgets, “a decent chunk represent[s] dollars flowing out of other ad formats, including digital,” MoffettNathanson says.


Lowered 2023 Estimates


For 2023, the firm has lowered its estimates across the board (except for online). It now projects total television ad revenues will decline 11% this year, newspapers down 8% and radio down 5%. That adds up to $15.78 billion for radio in 2023 from $16.61 billion in 2022.


“While the macro-environment continues to be plagued by uncertainty, the economy and consumer demand continue to outperform expectations,” the report says.


Digital continues to enjoy tailwinds, it says, which translates into low double-digit growth for digital through 2025. The forecast calls for 6.3% total U.S. ad growth through 2025 “with the typical lumpiness around political spending.” Radio is expected to show a compound annual growth rate of -3.7% from 2022-2025 with $15.30 billion in 2024 revenues and $14.84 billion in 2025.

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