Halfway through 2023, we’re still dealing with rising inflation and adjustments to consumer behaviors brought on by the pandemic. As we look ahead to the rest of the year, we should expect a return to some kind of normalcy in terms of advertising revenue growth.
There are five key themes from the report:
Retail media will represent 14.4% of total advertising revenue in 2023, reaching 15.4% in 2028 (note that we have revised our definition of retail media to include revenue from last mile delivery providers, and we have revised our historical figures accordingly).
Top 10 Markets
Media trends framework
Advertising, a partial or primary revenue stream for four of the five largest public companies, by market cap, is a central pillar in conversations spanning technology, culture, government and the economy. To help make sense of all the ways in which these ‘external’ factors will impact advertising over the coming months and years, we’ve developed a framework modeled on a PEST analysis.
This would not serve a fatal blow to TikTok’s parent company ByteDance, it but does point to the ongoing separation of the internet and ad economy between China and rest-of-world.
POTENTIAL TIKTOK BANS
It may soon become imperative to exclude political advertising in non-U.S. markets. On its own, U.S. political spending would rank 11th in ad revenue by country.
POLITICAL ADS
Regulators are weighing laws that would make social platforms more responsible for misinformation on their sites. This could impact development resources allocated to advertising product upgrades or innovation over the near term.
MISINFORMATION
Independent news and media organizations still play a critical role in providing communities with responsible and trustworthy journalism. Maintaining news investment can be a strategic option for advertisers looking for brand-suitable environments.
DIGITAL NEWS
Recent EU rulings on GDPR compliance (including a $1.3 billion fine for Meta) will likely lead to share shifts rather than systemic decline.
DATA PRIVACY
Legislators are weighing content and platform restrictions against historical precedent of Section 230 and similar laws. In the meantime, creating alternative campaign plans and budget allocations is often worth it as it provides the advertiser with the credible ability to walk away from a negotiation if the media partner is unable or unwilling to meet their terms.
Section 230
Big Tech has been a particular focus of antitrust agencies in the U.S. and Europe. This is likely to lead to continued development of smaller media and advertising players over the near-to-medium term.
ANTITRUST CLIMATE CHANGE
Increases in shipping costs (tied to China’s developing nation status) could lead to a reduction in Chinese sellers advertising abroad in the future.
GEOPOLITICS
POLITICAL, LEGAL, REGULATORY:
2023 Global
Mid-Year Forecast
5.0% Canada
Growth
5.1%
U.S.
Growth
4.8%
U.K.
Growth
4.2%
France Growth
6.0% Germany
Growth
6.6%
Brazil
Growth
0.2%
Australia
Growth
12.0%
India
Growth
4.8%
Japan
Growth
7.9%
China
Growth
U.S.
1
5.0%
2024 Growth
2023 Ad Revenue
$322.5 B
2023 Growth
5.1%
2024 Growth
8.1%
2023 Growth
5.0%
2023 Ad Revenue
$19.7 B
Canada
7
2024 Growth
6.4%
2023 Growth
7.9%
2023 Ad Revenue
$150.6 B
China
2
2024 Growth
3.2%
2023 Growth
4.8%
2023 Ad Revenue
$52.6 B
Japan
3
2024 Growth
13.6%
2023 Growth
12.0%
2023 Ad Revenue
$17.3 B
India
9
2024 Growth
0.7%
2023 Growth
0.2%
2023 Ad Revenue
$14.0 B
Australia
10
2024 Growth
5.2%
2023 Growth
6.6%
2023 Ad Revenue
$19.2 B
Brazil
8
2024 Growth
5.3%
2023 Growth
4.8%
2023 Ad Revenue
$49.4 B
U.K.
4
2024 Growth
9.7%
2023 Growth
4.2%
2023 Ad Revenue
$26.9 B
France
6
2024 Growth
5.0%
2023 Growth
6.0%
2023 Ad Revenue
$36.1 B
Germany
5
TACTICAL
STRATEGIC
EMERGING OPPORTUNITIES
Print continues to decline despite growth of digital extensions. Print’s total share of advertising revenue is forecast to be 5.7% in 2023, dropping to 3.7% in 2028.
Digital pureplay ad revenue will account for 68.8% of the total in 2023 and will reach 74.4% of total ad revenue by 2028. A single-digit growth should be thought of more as a function of the size and maturity of “digital” rather than a recessionary environment.
We expect global advertising revenue to grow
(excluding U.S. political advertising)
5.9%
in 2023 and grow 6.0% in 2024.
Channel updates
Regulation
connected tv
Retail media
artificial intelligence
new business growth
tied to data privacy, national security, competition and freedom of speech is impacting big technology and advertising platforms.
adoption, among consumers and advertisers, is growing rapidly, adding 10.4% in ad revenue between 2023 and 2028 on a compound annual basis.
is the third-fastest growing advertising channel in 2023 (behind digital OOH and CTV, although those channels are a fraction of the size). Retail media, which we now define as including ad revenue from last mile delivery services, will grow 9.9% to reach $125.7 billion in 2023, and is forecast to exceed TV revenue (including CTV) in 2028.
is likely to inform, or touch in some way, at least half of all advertising revenue by the end of 2023. It is incumbent on all of us to use it conscientiously and with appropriate safety measures in place.
and competition remain integral to forecasting advertising growth.
digital
retail media
AUDIO
PRINT
TELEVISION
+8.4%
+9.9%
+0.3%
-4.8%
-1.2%
We are likely to see a “superbloom” of AI-backed start-ups gain scale over the next two-to-five years, with many consumer-facing companies using advertising to acquire users and grow revenue. This could lead to another period of advertising growth above-and-beyond expected GDP growth.
START-UP BLOOM 2.025
The three key drivers of secular advertising growth are maturing:
INDUSTRY MATURITY
EMERGING OPPORTUNITIES
Streaming businesses are likely to maintain competitive spending on content, especially sports rights and local language content, as the battle rages for global subscriber and revenue growth.
CONTENT SPENDING
We estimate the global e-commerce share of retail sales will hit 19.3% this year, up from 18.8% in 2021, and 14.5% in 2019, pre-pandemic.
Global expansion of retail and e-commerce platforms is more challenging logistically than scaling a fully digital product like short-form video.
E-COMMERCE PENETRATION
STRATEGIC
As interest rates rose over the last 12-18 months, we noted a deceleration (and in some sectors
a decline) in marketing and sales expenses among digital endemics The slowdown in digital endemic advertising aligns to ad revenue declines between Q2 of 2022 and Q1 of 2023.
INTEREST RATES
We have reached a point where continued price increases have led to added “friction” in consumer spending.
GLOBAL INFLATION
TACTICAL
Economic:
The largest advertising markets also have some of the largest percentages of adults over 65.
GENERATIONAL SHIFT
EMERGING OPPORTUNITIES
Ad revenue has followed shifts in time spent and in 2022 more than a quarter of global ad revenue was spent on the largest UGC platforms (ex-China).
UGC VS. PROFESSIONALY PRODUCED CONTENT
STRATEGIC
Globally, as content and audiences move to streaming platforms with on-demand models, sports has remained the key driver for live TV viewing. The move to streaming and digital assets could have a significant impact on how sports are consumed, with the ability for leagues and media owners to offer more personalized or tailored content.
SPORTS & SPORTS RIGHTS
Consumers are likely to pay for whichever services are investing in quality content, and there is ample headroom for total SVOD consumer spending, especially in markets where pay TV penetration has been historically high.
CONSUMER SPENDING ON VIDEO
TACTICAL
Social:
nothing here
EMERGING OPPORTUNITIES
The less interruptive nature of these messages could broaden the appeal of ad-supported streaming products.
Dynamic Insertion
The benefit of generative AI is likely to improve with the creation of closed or proprietary tools or AI sandboxes.
PERSONALIZATION AT SCALE
We may never have purely autonomous AI agents as members of the marketing team, but there are opportunities for AI to perform categories of tasks.
AUGMENTATION
STRATEGIC
Use of AI should be transparent to audiences, and the goals created for AI optimization must be scrutinized for potential harm and unintended consequences.
TRANSPARENCY, TRUST AND INTENT
Search advertising will account for 22.6% of advertising. Search is happening on video, retail and social platforms. The injection of AI into the channel and expansion of conversational search will lead to further evolution.
SEARCH
Without much discussion, standardization or controls, we’re already using AI to inform half of all ad revenue. This will surpass two-thirds of ad revenue by 2028.
AI & ADVERTISING
TACTICAL
Technological:
GLOBAL ECONOMY
We expect an ongoing trend of normalization to play out in the second half of 2023 and 2024.
In 2023, global traditional TV revenue is forecast to be $133.6 billion (excluding U.S. political advertising). By comparison, CTV revenue in 2023 is estimated at $25.9 billion, an increase of 13.2% over 2022.
Growth will remain flat as we do not expect audio to regain pre-pandemic revenue despite the continued growth of digital audio, which is estimated to increase revenue 10.9% in 2023 and reach $9.9 billion in 2028.
OOH
+12.7%
Overall growth is helped by a 39.7% rebound in China. Digital OOH, taken separately, is forecast to grow 26.1% in 2023 to $13.3 billion.
MEDIA CONCENTRATION
The top 25 global ad sellers accounted for 75.3% of total 2023 ad revenue, up from 74.0% in 2021.
The IMF projected in April that global inflation would be 7.0% in 2023 — better than 2022’s 8.7%, but still well above “normal” levels.
Unemployment levels remain low with the U.S. at 3.7% (May 2023), Germany at 2.9%, Canada at 5.0% and the EU at 6.1% as of April 2023.
The three key drivers of secular advertising growth are maturing:
INDUSTRY MATURITY
Spending by Chinese advertisers abroad.
Creative destruction
High-intensity digital endemic advertisers
Spending by Chinese advertisers remains an important secular driver, although its size and geographic distribution also remain a significant unknown going forward as geopolitical tensions may limit the ability of Chinese platforms and manufacturers to operate profitably overseas.
The creation of new businesses continues, and current regulatory scrutiny of mergers and acquisitions may actually increase competition, leading to greater advertising intensity
We are likely to see a “superbloom” of AI-backed start-ups gain scale over the next two-to-five years, with many consumer-facing companies using advertising to acquire users and grow revenue. This could lead to another period of advertising growth above-and-beyond expected GDP growth.
START-UP BLOOM 2.025
The three key drivers of secular advertising growth are maturing:
INDUSTRY MATURITY
The three key drivers of secular advertising growth are maturing:
Spending by Chinese advertisers abroad.
Creative destruction
High-intensity digital endemic advertisers
INDUSTRY MATURITY
EMERGING OPPORTUNITIES
Higher interest rates led to more conservatism and decelerating growth of advertising expense, and as these companies mature, advertising as a percent of revenue is likely to approach the levels of industry incumbents.
STAT CALLOUT AT BOTTOM OF PAGE 41
The development of mixed reality goggles, on top of the ongoing evolution of smartphone cameras and a behavioral shift from text to images, are likely to support a move to more image-based search.
retail revolution
The IMF expects global inflation to slow down to
1
5
2
3
4
7.0%
$874.5 billion
Global advertising in 2023 will total
(excluding U.S. political advertising).
We are at an inflection point where the secular drivers of advertising growth above and beyond GDP growth are maturing, the pandemic upheaval is receding and the dynamic rise of digital advertising has slowed. This is the basis of our underlying forecast of mid-single-digit advertising growth over the next five years.
However, the pervasive impact of AI on the world of advertising could change that. Advertisers in this environment will be well-served by having proactive guidelines and the right partners to navigate these waters so that choices in budget allocation and the use of AI are made intentionally with the long-term health of the business in mind.
in 2023.
GLOBAL & REGIONAL AD GROWTH
2023 GLOBAL CHANNEL SHARE
Explore various editions of This Year Next Year:
Explore other editions of This Year Next Year Mid-Year 2023:
