The advertising industry is anticipating a modest period of growth in 2025. However, this growth is projected to be in the single digits, marking a significant shift from the double-digit increases witnessed over the past several years. Previously, the digital advertising sector experienced robust revenue increases of between 10% to 15% annually. IAB Europe Chief Economist Daniel Knapp, speaking to Digiday, shared a realistic outlook for the future, stating, “I’m a realist... the exorbitant growth phases are behind us.” He added that while an economic recovery is evident, it is “not translating into an acceleration of advertising growth in 2025,” with European countries facing the lowest growth rates since 2009.
A notable point of interest is the future of social advertising, particularly in light of an impending potential ban on TikTok. The looming ban is expected to lead to a redistribution of advertising budgets across various platforms. Analysts suggest that this may benefit competitors like Snapchat, Instagram, and YouTube, while shrinking the overall pool of social advertising. Industry analyst Brian Wieser, who produces the newsletter Madison and Wall, has moderated his forecasts for social advertising growth, predicting an increase of only 5.4% in 2025, a significant drop from the 16.7% anticipated for 2024, excluding political advertising.
The trend of consolidation isn't limited to the advertising sector; it is also reflected in the consumer packaged goods (CPG) industry, where agency holding companies and large brand entities are increasingly merging or acquiring services. Recent reports highlight the merger of Omnicom and Interpublic Group, along with potential acquisition moves in the CPG domain. Bloomberg's analysis indicates that Mondelez is reconsidering a previous bid for Hershey’s, which was rejected in 2016 at $23 billion; it may now come at a cost exceeding $45 billion. In another significant transaction, Mars acquired snack company Kellanova for $36 billion. Pepsi has also been active in this space, securing full ownership of Sabra and purchasing Siete for $1.2 billion.
Historically, CPG holding companies had shown interest in acquiring direct-to-consumer (DTC) and startup brands to gain insights into their innovative business models and data utilisation. However, this trend appears to be shifting back to traditional retail strategies focused on packaging and in-store performance. Unilever's recent divestment of Dollar Shave Club to a private equity firm exemplifies this pivot away from the data-driven DTC focus.
Antitrust enforcement in the technology sector may experience a notable shift should Donald Trump regain the presidency. Commissioner Andrew Ferguson, aligned with the Republican party, has put forward a proposal to lead the Federal Trade Commission (FTC). His vision diverges significantly from the current chair Lina Khan’s approach, suggesting a move away from in-depth regulatory scrutiny towards a stronger focus on addressing what he perceives as 'unlawful censorship' by platforms. In this context, Ferguson's pitch includes a promise to “investigate and prosecute collusion on DEI, ESG [and] advertiser boycotts.”
In addition to these pivotal developments, various entities are exploring new innovations and opportunities. OpenAI has announced the launch of Sora, a new text-to-video AI model, marking a significant advance in generative technologies. As media firms adapt, Warner Bros. Discovery is currently searching for a new head of advertising sales, while senators have urged the FTC and DOJ to investigate potential antitrust violations involving gambling giants DraftKings and FanDuel.
Furthermore, digital platforms such as Bluesky are contemplating subscription models, Reddit is trialling generative AI for its search chatbot, and emerging markets are beginning to see China-based merchants expanding beyond Amazon. The ecosystem of digital advertising and CPG is evolving rapidly, influenced by technological innovations, shifts in consumer behaviour, and changing regulatory landscapes.
Source: Noah Wire Services