AI and politics potential game changers for global advertising
Global advertising is forecasted healthy growth in 2024 but one big forecaster warns that both AI development and political regulation can change the market. Global advertising revenue will grow 7.8% in 2024 to $989.8 billion, marketing giant Group M says in its half year forecast. Marketing firm WARC says social media is now the largest advertising channel worldwide having overtaken paid search and is forecast to total $247.3 billion this year, up 14.3% year-on-year. Time spent with social platforms has increased by 50% since 2014, to an average daily consumption of 152 minutes
AI development and political regulation can upend the forecasts. Group M says that the marketing ecosystem over the next few years will face impacts from governments and regulatory bodies across the world.
The company stresses that this is especially the case with decisions that could be taken by the US and China.
“AI also has the potential to reshape the industry – as do regulations put in place to guide (or control) its growth. Those regulations, of course, depend on politicians, which in turn are determined by upcoming election cycles”, the forecast says most probably referring especially to the US presidential election in November.
CHINA AND US
“The marketing ecosystem over the next few years will face potential impacts from governments and regulatory bodies across the world — impacts that have the potential to upend forecasts and alter even the most sound projections.”
“On top of that, such projections can be skewed by two major players, China and the US. Their governments and their major companies have the power to shape vast aspects of the global economy.”
“Despite some reactionary moves toward protectionism from some of those politicians, we can see the power and enduring appeal of shared experiences brought by globalisation, whether it be a Korean series rocketing to the top of the Netflix charts, or Rema bringing Afrobeats to Spotify’s top songs list. You can see it, too, in increasingly global fan bases for sports.”
“With increased globalisation – of financial systems, commerce, and media – can come a level of resilience as interconnected systems such as coral reefs tend to be very adept at recovering from multitudinous small shocks. Innovation, the exchange of ideas, and a shared goal to make the advertising industry work better for everyone will help ensure a bright future”, the forecast says.
By 2025, the advertising industry is expected to surpass one trillion in revenue. Group M expects it to increase 6.8% to $1.1 trillion, one year earlier than in the company’s forecast six months ago.
The US is expected to reach $365.9 billion in ad revenue, up 5.8% over 2023’s $345.9 billion excluding the impact of political advertising in both years.
“The great economic engines of the US and China, which together make up 57.1% of global ad revenue, are clearly the largest drivers of growth, adding $44.5 billion to their totals in 2024 (excluding US political spending) — nearly 1.5 times the cumulative $27.4 billion in incremental revenue for all other markets combined”, the forecast says.
CHANNEL FORECAST
“They are also home to 22 of the top 25 global media sellers and account for more than 40% of global GDP.”
Group M’s media channel forecast: Digital + 10%, Search +5.3%, Retail +17.5, TV +2.7%, OOH +11.5%, Audio +0.8%, Print -3.0%, Cinema +7.1%.
“Much of social media’s success has been driven by Meta’s remarkable renaissance. However, social’s stronghold on budgets can also be seen in TikTok’s rise, and a return to double digit ad revenue growth at Snapchat and Pinterest”, says Alex Brownsell, Head of Content, WARC Media.
WARC key findings :
- Meta alone is on track to overtake all global linear TV in ad revenue in 2025.
- Investment in AI is helping drive incremental spend on social.
- TikTok’s growth will slow to 18.3% year-on-year to $23.1bn this year amidst US ban concerns
- Snapchat and Pinterest return to double digit ad growth.
- X’s ad revenue is forecast to decline by 6.4% globally and 5.1% in the US.
- Ad loads are rising across social platforms. Meta increased its ad load in Q4 2023 to 19.1%.
- Social platforms are becoming increasingly homogenous.
Global social spend is set to total $247.3 billion in 2024, up 14.3% year-on-year, a slight deceleration from +16.0% in 2023. Western platforms are growing fastest, fuelled by Chinese brands targeting US and European audiences.
Both Facebook and Instagram grew by more than 20% year-on-year in Q1 2024, and Meta is forecast to earn $155.6 billion in ad revenue this year, representing a 63.0% share of global social spend, fuelled by a wave of investment from Chinese exporters, and the popularity of its AI tools.
According to WARC Media, Meta is set to overtake global linear TV in advertising spend terms in 2025.
The report forecasts TikTok will earn $23.1 billion this year. The +18.3% year-on-year increase is down from the 87.8% growth rate it clocked up last year, despite the introduction of new search and shopping ad formats.
“Given TikTok’s unique popularity with Gen Z audiences, many advertisers in the US will be hoping a ban does not come into effect.”
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