Commentary
Deciphering The $1 Trillion Global Ad Spend Projection
- by Dave Morgan , Featured Contributor, August 31, 2023
Advertising spend on a global basis is projected to grow 4.4% this year and 8.2% next year to hit $1 trillion in total spend in 2024, according to a new study from WARC. That’s a lot of money.
Given the dynamism around where the ad spend growth is projected to go, what it could mean to each of you depends where you sit in the ad ecosystem. The growth will not be spread around evenly, either by country, media channel or company.
The U.S., China and the U.K. are expected to drive a lot of the growth since even small changes in already big markets mean bigger numbers. Digital media as a category will grow a lot. In fact, not only will digital capture a growing majority of all ad spend, but five digital companies – Alibaba, Alphabet (Google, YouTube), Amazon, ByteDance (owner of TikTok and Douyin) and Meta (Facebook and Instagram) -- will capture 51% of spend by themselves.
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So not only will those five companies control a majority of all global ad spend, those five companies are all 100% digital and digital natives. What happened to the notion of years past that the largest traditional media companies would be able to build or buy their way into an equally large digital future?
They all got leap-frogged!
What channels will grow most? Digital ones, of course. Social media, retail media (digital ads powered by purchaser data) and streaming TV are projected to be the fastest growing in capturing spend.
What does this mean for companies supporting the ad ecosystem? A lot.
New technologies, new processes, new suppliers and new talent are needed to support this fast-transforming industry. You can imagine that 10%-40% of that spend will be available to companies that can enable growth for ad buyers, ad sellers, media companies and platforms working in this world. The areas of concentration are very clear: digital, walled gardens, social, retail, streaming TV. The areas of value creation and disruption are even more numerous: data, identity, privacy, personalization, measurement, video, gaming, production, modeling -- and so on and on.
This is the time to start building strategies, your objectives, your roadmaps. Are you ready to chase that $1 trillion?
Great analysis, Dave.
I was wondering how WARC's estimates alinged with others in the industry.
Of course, Brian Wieser -- when he was still at GroupM -- previously topped that number (albeit for marketing spend, not ad spend per se), by a wide margin:
https://www.mediapost.com/publications/article/378570/how-about-6-trillion-is-6-trillion-big-enough.html
Interesting, Dave.
We should note that the projected ad spend figures seem to include all digital ad dollars, much of which are devoted to search and other DR efforts as well as other activities which might be described as sales promotional in nature---not basic brand building campaigns. So even if a small number of digital ad sellers "control" what appears to be a huge slice of the total "ad pie" that's not as sobering a stat as some may think---at least not for branding advertisers---many of whom allocate 50-70% of their branding ad dollars to "TV" ---linear and/or streaming. For them what matters is who controls what percentage of national TV's quality and non-premium GRPs and here, a relatively small group of TV networks and cable consortiums, rules the roost, not social media. Whether this will change remains to be seen, of course.