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Suddenly the forecasts for the advertising industry are becoming rosier, but the largest companies will benefit the most

Never say that uncertainty leads to a decline in advertising spending.

So far this year, the market has held up well despite regional conflicts, persistent inflation, high borrowing costs and the possibility of several markets slipping into recession.

And it looks like this upswing will continue for the foreseeable future. In fact, experts have even revised their forecasts upwards to take into account the additional upside potential.

GroupM now expects global advertising spending, excluding political advertising, to grow 7.8% to $989.8 billion by 2024 – a significant increase from the original growth forecast of 5.3%. And the company predicts that 2025 will see it surpass the trillion dollar mark for the first time.

Most of this growth will come from the US and China, which together account for almost 60% (57.1%) of global advertising spending, equating to $44.5 billion in advertising value this year coming from these two countries alone.

Kate Scott-Dawkins, president of business intelligence at GroupM, noted in her forecast for This Year Next Year ad that much of the growth is concentrated in the world’s largest publishers and platforms. In other words, the industry is experiencing perhaps its most unbalanced era of haves and have-nots.

“Overall concentration among the top 25 rose again last year to over 72%,” said Scott-Dawkins. “By our calculations, if we look at the five largest advertising sellers over the last seven years, [Google, Meta, Bytedance, Amazon and Alibaba]their average annual growth rate was 23%. The rest of the market as a whole, if we exclude these revenues, grew by only 2.1% – slower than global GDP over the same period.”

The forecast is in line with that made earlier this month by leading advertising analyst Brian Wieser, author of the Madison and Wall newsletter. He has updated his own forecast for advertising spending – for the fourth time in four quarters – and estimates that advertising spending in the US will grow by 6.3 percent this year. In September, he had expected an increase of 4.3 percent. And that does not include spending on political advertising.

GroupM’s Scott-Dawkins increased her growth forecast for the U.S. market to 5.8% in 2024 and another 4.9% in 2025. Much of the growth is coming from the retail media sector, which grew 22% to nearly $48 billion.

That’s based on “really strong stats earlier this year from Walmart, Amazon” and other major retail media players, Scott-Dawkins said.

The same big-picture growth story applies to Dentsu. A month ago, the agency holding company said global advertising spending will grow 5.0% this year to $754.4 billion, compared to the 4.6% it had forecast at the end of 2023. This revised forecast not only exceeds the advertising spending Dentsu forecast last year, which already beat expectations with 3.3% year-on-year growth, but also exceeds the global economy’s growth rate by 1.8%.

That’s the problem with ad spending. It’s driven by companies, not consumers, so it’s not as closely tied to economic and political machinations as it once was. The years since the pandemic have made this clear. They’ve shown that ad spending adapts to uncertainty rather than being held back by it.

This is due to the globalization of marketing spending and better measurement tools, which have made advertising spending less tied to traditional economic indicators such as GDP. Of course, GDP is still a useful indicator for understanding potential advertising trends, but it is now just one of many factors to consider.

“You can have a negative economy and positive advertising at the same time,” said Wieser. “If you use the relationship between GDP as an indicator of economic activity and advertising, [to forecast]Don’t assume that these things will last at all.”

https://digiday.com/?p=547533

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