• by Karlene Lukovitz  @KLmarketdaily, December 4, 2023

Connected TV will continue to see strong ad revenue growth next year and through 2028, putting it on track for near-parity with sinking linear TV, according to GroupM’s 2023 global end-of-the-year forecast.

CTV is forecast to see 13.2% global growth in 2023, to reach $29.2 billion, and a compound annual growth rate/CAGR of 9.5% through 2028, to reach $45.8 billion.

Linear, in contrast, is expected to see -1.3% CAGR through 2028, which will result in overall global TV ad revenue CAGR of just 1.1%.

CTV/streaming TV revenue is nearly at a point where it will surpass linear to generate more than half of total TV revenue, and with major streamers adding ad-supported tiers, this could happen by 2026, according to GroupM.

Globally, overall TV ad revenue dropped to 17.9% of total ad revenue in 2023, largely because of small and medium-sized companies/SMBs shifting their ad dollars to digital advertising with Meta and Google. By 2028, GroupM forecasts that global TV revenue will fall to its lowest level since 2005.

Streaming has increased its share of advertising across the combined linear and streaming market to 46% from 34.5% since the start of 2021.

In the U.S., CTV is projected to see 10.9% ad revenue growth this year and 14.8% growth in 2024, to reach $16.6 billion, for a 26.6% share of total TV advertising. Traditional TV is forecast to decline 8.6% in 2023 and 10.7% in 2024, to $45.7 billion.

The result: Overall U.S. TV ad revenue will fall 5.1% to $62.3 billion in 2024. 

Given that many viewers continue to prefer ad-free streaming plans, and that streaming services have smaller ad loads than linear, if 30% of total CTV viewing is ad-free over the next four years, GroupM expects average advertising hours seen by U.S. audiences to decline 17% by 2028.

Sports accounted for 23.5% of total national TV viewing hours among U.S. consumers 18 to 49 this year — up from just 14.1% in 2018.

Looking at the overall global ad revenue scenario, GroupM continues to project 5.8% growth (excluding political advertising), to $889 billion, for 2023—more or less in line with its 5.9% mid-year forecast.

For 2024, the global forecast calls for a slight deceleration in growth to 5.3% due to worldwide inflation and other economic factors. Adjusting for inflation, that represents negative growth. However, the forecast calls for a return to real growth in 2025 and a 5.6% CAGR through 2028.

In North America, 2023 ad growth is pegged at 5.6%, up from 5.1% in the mid-year forecast. A deceleration to 4.2% is forecast for 2024.

Digital pure-play advertising—including search, retail media, social media and YouTube and TikTok, but excluding CTV, streaming audio and digital out-of-home — rose 9.2% in 2023, exceeding GroupM’s mid-year forecast of 8.4%.

A deceleration in digital to 7.3% is forecast for 2024, to total $662.2 billion, but continued growth will drive the total to $1.2 trillion by 2028, making it larger than the entire advertising industry in 2022.

Digital is projected to command 75.5% of total global ad spend in 2028, versus 59.4% in 2023

Digital’s size is “staggering” compared to all other segments, noted the report’s author, Kate Scott-Dawkins, global president of business intelligence at GroupM.

However, when Google, Meta, ByteDance, Amazon and Alibaba — which grew by 25%-plus every year between 2016 and 2022 — are excluded, the overall digital market grew by just over half a percent.

Retail media, although still the smallest digital segment, added $10 billion in 2023, to $119.4 billion—falling short of GroupM’s June projection of $125.7 billion due to factors affecting the Chinese market. However, it is forecast to grow 8.3% in 2024.