According to dentsu Global Ad Spend Forecasts report, advertising investment is predicted to grow by 3.3% globally in 2023, with, an anticipated US$727.9 billion being spent worldwide by the end of the year, according to this mid-year ‘reforecast’ of dentsu’s twice-yearly report. Last year, global spend was at 7.9%, and despite an anticipated spend of US$727.9 billion in 2023, the pace of growth is expected to slow down.
The adjusted forecast for 2023 looks for continued growth, though the latest numbers have been adjusted marginally downwards from the 3.5% predicted in the December 2022 report. Dentsu said this is mostly due to macroeconomic factors, adding that the report also shows growth driven by media price inflation rather than increased advertising volume, where advertising spend at constant prices is expected to decline slightly, with –0.6% reduction year on year.
The global outlook however, as forecasted by dentsu across 60 markets, is more positive, with spend set to accelerate faster in 2024, increasing by 4.7% to reach US$762.5 billion. The boosted ad spend is being driven by major sporting and societal focal events such as UEFA Euro Championship and the US presidential election, the report said.
Digital at only single digits
2023 will see digital continue to grow, but “in an uncharacteristic single-digit increase” of 7.8%, which has only happened twice before in the last 20 years: in 2009 (financial crisis consequences) and in 2020 (COVID-19 pandemic).
Dentsu said that looking ahead, single-digit growth in digital is expected to become the norm, with a fairly consistent dollar increase year on year for 2024 and 2025 (circa US$26 billion), against a backdrop of around 60% total market share.
Emerging digital categories are expected to continue to experience high growth in 2023, such as retail media (18.0%) and connected TV (15.2%). The preference for programmatic buying is also on the up, with advertising spend transacted programmatically forecast to increase by 14.4%, to reach 71.4% share of digital spend in 2023.
From a channel perspective, the 2023 dentsu Global Ad Spend Forecasts outlook is now showing a mixed forecast with perhaps, most notably, a drop within the television ad spend for the year. TV ad spend is now expected to fall by -3.1%, totaling US$170.2 billion by end of year, which “in itself appears to be a temporary blip in its typically upward spending trend, with positive growth returning for 2024 onwards,” said Dentsu
In 2023, digital is set to overtake TV to become the largest media in India for the first time.
Print ad spending, which continues its decline (-4.8%), the other media channels are holding ground, with incremental year-on-year increases for Out-of-Home (+3.8%), cinema (+2.1%) and audio (+0.8%).
“This pattern of spending, based on our long-term extrapolations, could see Out-of-Home surpass print spend and become the third most popular format, sometime during 2026,” said said Peter Huijboom, Global CEO, Media international markets, dentsu.
“Of course, we’re excited about the impact Generative AI could have on our industry with the arrival of new in-channel opportunities for brands to embrace, so we’ll need to see if it remains the case.”
“For years now we’ve seen the industry pivot towards digital, more than doubling investment in the last five years, thanks in part to the almost unlimited potential to reach, engage and sell to individual consumers,” said Huijboom.
“It has been one of the big drivers for growth, but with finite marketing budgets available to brands – it’s clear we are now starting to reach a point of digital maturation within the campaign mix alongside more traditional channels.”
He added that some markets, such as India, will continue to see strong growth.
“There are still some markets, for example India where the digital potential is in its adolescence, who continue to see rapid growth in digital spending – contributing to the global uplift. But it is also through innovations in tech, updated platforms, new channels and changes in planning behaviors, we’ll retain this consistent growth within digital investment worldwide.”
The Asia Pacific
The reports focus on APAC noted China as “the top”, the fastest growing as India, and the “one to watch” – Japan.
The country accounts for 51.1% of the regional advertising spend, said the denstu report, adding that advertising spend is forecast to reach $123.4 billion in 2023, with the reopening of the economy paving the way for a faster-than-expected recovery by 5.1% (vs. 3.2% in the December 2022 forecasts). The positive trajectory is projected to continue with a balanced quarterly performance throughout the year and a similar growth rate of 5.2% in 2024. Growth in 2023 is expected to establish a more stable foundation for the ad market in 2024.
The India ad market is projected to grow by 14.5% to reach $12.0 billion – the third consecutive year of double-digit growth. Growing by 36.6% and totaling $5.0 billion, digital is the primary driving force of the Indian ad market and now takes a 41.4% share of spend. The report added that in 2023, digital is set to overtake TV to become the largest media in India for the first time.
The world’s third largest advertising market performed better than expected in 2022 with 4.4% growth, revised up from the previous prediction of 3.6% in the December 2022 report. Dentsu said that growth in 2023 has subsequently been revised down to 1.0% from 1.5%. Japan advertising expenditure is expected to grow in 2023 to $54.1 billion despite continuing macroeconomic uncertainty.
For the Australian market, dentsu forecasts growth of 3.2 percent, with ad spend growth continuing to slow down in 2024, forecast to grow by 2.4 percent, and then 2.2 percent in 2025.
Image by Rosivan Morais