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Trim the trees—the holiday season is going to be extra merry for Madison Avenue, at least according to a new economic forecast.
The forecast, from industry analyst and former GroupM executive Brian Wieser, found that the digital advertising economy appears to be coasting along just fine: Ad revenue, excluding political spend, is expected to grow 5.9% in 2023, nearly 1% higher than the 5% Wieser previously predicted. Looking ahead, Wieser expects digital ad spend to grow about 5.2% in 2024, instead of his previous prediction of 4.3%.
Wieser’s previous forecast in September predicted a return to normalcy, far from the sugar high of the last decade, when digital ad spend surged. Several months later, “it feels better than normal,” he told Marketing Brew.
“The third quarter was up by over 8%…This is not inflation; this is just strong demand,” he said.
📈📈📈: Ad revenue on digital platforms, like Google, Meta and TikTok, grew about 14.6% in the third quarter of 2023 in Weiser’s estimation, beating his previous estimate of 12.3%, and he found that ad revenue on national TV was down by 3.2% in the quarter, instead of the 6.5% decline he predicted. Commerce media platforms, which includes retail giants like Amazon and Walmart as well as platforms like Expedia and TripAdvisor, saw ad revenues grow 22.8% in Q3, Weiser found.
There are a few things juicing the digital ad market, he wrote, including “cross-border spending (primarily from manufacturers based in China),” as well as increased spending from e-commerce companies “who are much more advertising-intense than traditional retailers and manufacturers,” and e-commerce platforms, which provide more places to run ads. Wieser told Marketing Brew that he expects e-commerce retailers to spend, on average, $4 for every dollar that a traditional retailer spends on advertising.
Other factors that could be helping to buoy growth include Big Tech’s AI advertising tools, like Google’s Performance Max and Meta’s Advantage+.
Despite concerns that the Israel-Hamas War could impact some spending, Wieser wrote that he doesn’t “believe the wider industry experienced noticeable deterioration from the underlying trends,” as a result.
Spending spree: Weiser’s forecast bakes in how holiday spending expectations could affect digital advertising trends, and the National Retail Federation expects holiday shopping to increase 3%–4% this year. That’s a slowdown from 2020 and 2021, but is in line with pre-pandemic averages, Retail Brew reported.
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