‘By 2029, 94% of advertising will be AI-enabled or touched in some way’
Every year, GroupM - the investment arm of WPP – releases the annual This Year Next year report. The report highlights an all-encompassing view of the global ad market summarizing past year and looking forward to what we can expect next year, and over the next five years. The task for this report is on the shoulders of Kate Scott-Dawkins, President, Global Business Intelligence, GroupM, the author of this report.
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This Year Next Year 2024 Global Midyear Forecast, shows that the global advertising revenue will grow 7.8% in 2024 to $989.8 billion, an upward revision from the 5.3% that was forecast in December last year. The industry will surpass one trillion in revenue in 2025, increasing 6.8% to $1.1 trillion.
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Sharing insights on the upward revision Scott-Dawkins says, “China and USA alone make up more than 57% of the global advertising revenue. So, when we revised and upgraded those forecasts, they tend to have a large impact on the global figures. Within China in the last six months, we have revised the modelling and increased our expectations of the digital platforms in China. So, Douyin – which is the ByteDance sister app to TikTok – and RED, we are seeing what typically has been offline sales activity that’s actually moving on to these social platforms. That’s what has been a large part of the upward revision, not necessarily better or very optimistic expectations for consumer spending in that market or globally.” However, if USA and China markets are excluded, then the December forecast is 6.5% versus the latest estimated forecast of 6.9% for the global markets. Scott-Dawkins also highlights that the industry is now coming into a normalized period of growth after the Covid-19 pandemic, and the estimated 5.9% compound annual growth rate (CAGR) for a five-year-period is back down to the trend of being slightly slower than global GDP growth and this indicates a stabilization over the next five years and moving out of the volatility of the last couple of years. Another highlight from the report was the growth of retail media which is expected to represent 15.1% of total ad revenue in 2024, up from just 1.5% a decade ago in 2014. Talking about the emergence of retailers as media owners, Scott-Dawkins says that for the first time Walmart is now among the top 25 global media owners this year. She says, “It is now at such a scale, especially in the larger markets, where growth is decelerating somewhat, although we are predicting more than 20% growth in the USA this year and China similarly growing quickly. That speaks to how much room there is still for e-commerce in general, how much innovation is happening, in terms of retail media encompassing search not just on retail sites but also using retail data to buy on other channels such as CTV or other digital sites and platforms. We are going to see a lot of innovation and continue to see growth. The share will expand not necessarily quite at that rate as we have seen over the last decade.” Speaking about India she says that the retail media growth rates are in double-digits and increasing substantially. The competition between Flipkart and Amazon, ONDC and government pushing larger platforms to open up the marketplaces to sellers on ONDC. Moving on to AI-enabled advertising, Scott-Dawkins says that elements of AI such as natural language processing and machine learning have existed for more than a decade and AI has been built into the fabric of advertising. Now, there has been an expansion with consumer-focused use of AI and the prevalence and innovation is going to increase over the next couple of years. She says, “We expect that by 2029, 94.1% of advertising will be AI-enabled or touched in some way which is such a huge number.” Coming to India specifically, advertising revenue in India is expected to climb 9.5% to $18.5 billion in 2024. However, Growth will decelerate to 8.7% in 2025. Speaking on the deceleration Scott-Dawkins says, “It is going to be an increasing deceleration of inflation which will feel better in real terms, even as a headline number it is decelerating.” Speaking of sporting properties she says, “Sports is one of those areas where increasingly we view these tournaments as, not necessarily as incremental each year, but more about shifts. So shifts to the media rights holders, shifts in time of year, but less in boost in a single year. Where that changes is, the next time the T20 tournament is in India or if the Olympics is in India, we sometimes see a boost for the home country. So France’s growth rate this year is higher than it would be if they weren’t hosting the Olympics but otherwise we don’t tend to see an industry level bump from these activities.” Looking at the elections this year, she estimates that the political ad spending in India will represent 0.9% of total ad revenue.
Tags : Cannes Lions Kate Scott Dawkins Groupm