During the first half of the year, Magna updated its outlook for the ad market with the Ad Forecast Report. It tracked the net revenues of media owners combined with data from organisations trading with them in more than 70 countries. What conclusions did it reach for this year?
There is an upward calibration in global optics, with media growing by 10% this year, even on the back of a stronger-than-expected performance of the ad market in the first quarter and an improved macroeconomic outlook for major economies. Cyclical events will account for an above-average 1.3% of investment growth, with a record number of regular events, including four major sports tournaments and an election, delivering additional growth of 5% for TV and 0.5% for digital media globally.
Domestically, we can expect investment to grow at around half that rate, around 5%, even with the economy being one of the main drivers of advertising spend. In its April report, the International Monetary Fund (IMF) raised its 2024 GDP growth forecast for the world to 3.2%, mainly due to growth in the main non-European markets. In contrast, the crucial outlook for France and Germany has deteriorated. These two markets, on the other hand, will benefit media-wise from hosting major sporting events, which will boost marketing and advertising activities. In addition, inflation is generally slowing and is expected to be in the range of 2 to 3% in most major markets. This is still above the monetary authorities' long-term target, but low enough to no longer damage their sales and marketing efforts.
Traditional media will account for a smaller share of growth, with increases expected to be around 3%, but this is nonetheless a noticeable increase compared to 2023. Growth is being driven by both the aforementioned number of cyclical events and double-digit increases in non-linear advertising, which now accounts for a quarter of traditional media's total ad revenue and is set for more than 16% growth this year.
Predictions for media types
- Television as the strongest traditional player is expected to grow by 4%.
- Radio advertising is forecast to grow by 2%.
- A decline of about 2% is expected for print.
- OOH in 2023 has finally caught up to its pre-void levels and will continue to show strong growth of around 7%, driven by digital OOH and its programmatic buying.
- For pure online players, ad revenues will grow by 13% and account for 71% of total ad spend.
Online ad sales are driven by a number of organic growth drivers, including increased competition in online retail (e.g. Temu and Shein), the rise of retail media networks that provide the programmatic ecosystem with the consumer data it needs, growing digital penetration in emerging markets, and better monetization of fast-growing short-form vertical videos in social and video apps.
In terms of ad format optics, search remains the strongest, growing 12% this year. Social networks like Meta and TikTok will accelerate growth to 18%, while video platforms like YouTube, Twitch will grow 14%. Already for the first quarter of 2024, global search ad sales are up 16% year-on-year, video up 21% and social up 28%. But the pace of growth is sure to slow as competition gradually heats up. Double-digit growth is expected for all key digital formats .
Focusing on the major online space providers, for the full year 2023, the companies' ad revenues grew by 6%. Google grew by 16%, Meta and Amazon by 24%. The big three together control 60% of total ad revenues (50% when including China, where they do not operate). Among the world's top 20 vendors, Amazon (+24%), Bytedance/TikTok (+18%) and Apple (+23%) saw the biggest gains last year, while most traditional media companies posted declines (Comcast -16%, Disney -9%, Warner -12%) JCDecaux was the only major traditional media company to see ad revenue growth in 2023 (+3%).
Source: mediaguru.cz
