The global advertising industry is on track to reach unprecedented figures, as evidenced by a recent report from GroupM which forecasts that total revenue will exceed $1 trillion in 2024, with an anticipated growth of 7.7% leading to $1.1 trillion by 2025. This substantial growth is predominantly attributed to the digital advertising sector, which is expected to command a significant portion of the market. Notably, it is projected that the top five digital advertising firms—Google, Meta, ByteDance, Amazon, and Alibaba—will capture more than half of the total revenue.
In a dramatic shift in viewing habits, streaming television is expected to surpass linear television within the next five years. While total TV revenue will grow modestly by 1.9%, reaching $169.1 billion in 2025, streaming TV is set for a more vigorous growth trajectory of 12.9%. Meanwhile, linear television is projected to experience a decline of 3.4%. Despite this, GroupM anticipates that linear TV will still constitute 72.6% of total TV revenue in 2025, with approximately $122 billion, while streaming will hold a smaller share of 37.5%, expected to rise to 36.4% by 2029.
The disparity in advertising inventory between linear and streaming TV is a notable factor influencing growth trends. Currently, linear TV allocates 12 minutes of ad time per hour, compared to only four to five minutes in streaming formats, leading to a more captivating viewing experience that encourages audience engagement, as highlighted by Kate Scott-Dawkins, global president of business intelligence. “If the ad pod is shorter, people are less likely to get up and leave the TV set,” she explained during a recent press call, indicating the increased value of shorter ad breaks.
Meanwhile, the report notes that retail media is poised to eclipse traditional television advertising revenues for the first time. Increasing by 18.2% this year, global retail media ad revenue is forecasted to grow by an additional 13.8%, reaching $176.9 billion by 2025. In the North American market, revenue has surged nearly four-fold, driving an impressive growth to $50 billion. This growth is dwarfed by the projected earnings from the Asia-Pacific region, particularly China, where revenue is expected to reach $97.6 billion in 2025, with $74.4 billion coming specifically from the Chinese market.
Scott-Dawkins highlighted the significance of the US and China as the primary economic drivers for the global advertising sector, stating, “Those are the two economies that we have to look at and pay very close attention to.” However, potential changes in the relationship between these countries could significantly impact advertising dynamics, especially concerning influence from domestic trade in China and the implications of tariffs anticipated under the incoming administration.
In terms of future trends, the role of artificial intelligence in advertising continues to garner attention. While GroupM’s report touches lightly on this emerging element, it posits that the broad adoption of AI tools—especially autonomous systems utilising machine learning and natural language processing—will substantially influence the advertising industry. “Competition in the age of AI does require significant resources and scale,” Scott-Dawkins commented, noting that major players like Amazon, Google, and Meta, who are expected to contribute to 41% of global advertising revenue by 2025, are making considerable investments in their own large language model (LLM) tools.
Despite the promise of AI, companies appear cautious about fully relinquishing control over ad purchasing decisions to these technologies. As Scott-Dawkins indicated, while there is significant interest in harnessing AI to better understand market dynamics, “Most folks will tell you that we’re still a little ways away from really being able to hand over the reins to AI.”
The evolving landscape of the advertising industry signals profound changes shaped by technological advancements and shifting consumer preferences, charting a path for significant developments in business practices over the coming years.
Source: Noah Wire Services