The estimate for 2023 growth is 5.8%, totaling $889 billion, excluding U.S. political advertising.
At the close of 2023, the global advertising market remains on pace for 5.8% annual growth (excluding the impact of U.S political advertising) despite inflation, high interest rates, China's sluggish economy and lingering impacts from the pandemic, says GroupM’s TYNY Year end report.
Global advertising in 2023 is forecast to total up to 889.0 Billion Dollars (excluding the impact of U.S political advertising).
The growth will be decelerating in 2024 to 5.3%. Global advertising will return to positive levels of real growth in 2025, when the nominal growth rate will hit 5.6% and global inflation expectations from the IMF fall to 4.6%.
Top advertising markets
The top 5 global ad sellers have grown on a compound annual 25.4% basis from 2016 to 2022. While the U.S. and China retain their positions as the two largest ad revenue markets, respectively, the U.K. has overtaken Japan for the third spot. India has climbed from a number nine to eight.
Germany and France maintain their rankings, with Canada moving back from a number seven to nine, Brazil has risen from eight to seven. Australia remains the tenth largest market for ad revenue. These rankings are expected to hold for 2024, unless, of course, U.S. political ad revenue is counted as its own market, in which case it would soar past Australia and sit just behind Canada in tenth, the report adds.
The increasingly global footprint of brands, media owners and supply chains has brought a kind of stability to the ad market, ensuring growth can always be found in more fertile regions—for those that can afford to pursue it. It's a model that favors the biggest players, who are poised to further consolidate their advantage by leveraging their data to forge one-on-one ties with consumers and leading the pack to full AI integration.
However, with global interdependence comes added vulnerability to geopolitical disruption, and the effects of ongoing conflict eventually reach players of every size. Advertisers in this environment will be well-served by having proactive guidelines and the right partners to ensure budgets are allocated with the long-term health of the business in mind.
Categories contributing to global advertising
CPG- CPG advertisers have continued to invest in media and messaging despite rapid input cost inflation and itinerant price increases for consumers, a strategy that seems to be paying off. CPG media and communication investment to continue despite receding inflation and lower expected contributions from pricing across CPG companies. CPG advertisers (including alcohol) will make up 19.7% of total ad revenue in 2023, the largest overall contributor.
Auto- Auto advertisers are increasingly replacing the dealership model with a direct-sales model, turning dealerships into de facto agencies while manufacturers own the customer relationship. As with content studios that launched streaming services, this could lead to increased ad spend from the auto industry as manufacturers seek to connect more directly with customers. New launches, particularly in the EV category, will also drive spending, and even Tesla has started running campaigns in some markets.
Luxury- Luxury retailers welcomed back in-person shoppers during the first year without pandemic restrictions in major markets. While the industry is increasingly leaning on digital channels —particularly influencers but also CTV and social video—it remains one of the biggest buyers of print and OOH media. Luxury advertisers represented 2.2% of global ad revenue in 2022 and are expected to maintain roughly the same share in 2023.
Technology- While economists argued over the chances of a recession in 2023, tech companies were updating their products and services to meet the challenges and opportunities of the new AI economy. The total tech composite represents 5.5% of total ad revenue. The report says, concerns about the economy and potentially longer upgrade cycles from both consumers and businesses facing steep borrowing costs to weigh slightly on the sector in 2023 and possibly 2024, resulting in a similar share of contribution to total ad revenue.
Media Entertainment- The shift to digital in media and entertainment has transformed the industry's ad strategies, business models and value chains. The more these companies embrace DTC models, the more they resemble the tech and social media giants they now compete with. In 2024, advertising is expected to retain its focus on proven IP and sports content. The industry represents 7.4% of total global ad revenue, a figure that would be higher if it included the promotion of titles across studio's owned and operated networks.
Digital Endemics- As the market matures and borrowing costs remain high, advertising growth from digital endemics decelerates from the high single-digit rates of 2016-2019. Digital endemics are still classified as high-intensity advertisers, with median advertising spend (excluding Amazon, Google and Meta) representing 14.9% of revenues in 2022. As AI-focused start-ups gain scale in the coming years, they will partly rely on advertising to acquire users and grow revenue.
Big Trends of 2023
Direct-to-Consumer- Advertisers, even those enlisting the expertise of agencies, are drawing on deeper and often more direct relationships with their customers. This is especially true of the automotive, media and entertainment sectors, disintermediating customer marketing and allowing for more personalized messaging .
Sports & Events- In the face of atomization of an individual’s day-to-day experiences—where their entertainment, search and shopping recommendations, and even their news digest, is increasingly customized and algorithmically driven—brands are leaning into shared experiences and live, fan-based events as something that can create a sense of community.
Artificial Intelligence- Just as every business is now a “digital" company, the same will soon be true of AI—especially in the world of advertising. Artificial intelligence will permeate products, services and operations at all companies, even if early benefits accrue primarily to those technology providers developing large language models and supplying the compute needed to train and query them.