GroupM, WPP’s Media Investment Group, has released its 2023 global end-of-year forecast and it shows a good year ahead for Canada.
Domestically, ad revenue is expected to grow by 4% this year and continue the upward trend next year with 5.7% growth predicted.
However, global revenue growth is expected to be 5.8% in 2023, growth will decelerate to 5.3% next year. Ad revenue growth is expected to remain at mid-single digits through 2028.
GroupM’s “This Year, Next Year” (TYNY) report covers the health and outlook of media owners around the world, not just the sellers of advertising, but also the largest ad buyers and how the economic and consumer environment is likely to impact changes in advertising investment. The report also incorporates available data from public filings, as well as from across the GroupM network.
Some of the rankings of the tracked markets have shifted in this December forecast from GroupM’s June release. The U.S. and China remain the two largest markets in terms of ad revenue. The U.K. has replaced Japan in the number three spot, due mainly to the weakening of the Japanese yen over the last six months. Germany and France sit in fifth and sixth spots, with Canada falling from seven to number nine. Brazil has moved up to seven. India is in the eighth slot and Australia remains the 10th largest market for ad revenue. These rankings are expected to hold for 2024, unless U.S. political ad revenue is counted as its own market. Then it would displace Australia and come in just behind Canada to take the 10th spot.
Lindsey Talbot, chief investment officer for GroupM Canada, says AVOD is currently Canada’s fastest growing segment. “It’s really accelerated with the launch of Crave TV with ads, Disney+ now launched with ads, and Prime Video will launch with ads at some point in Q1 of 2024. To have all the premium offerings now available in Canada is a really good opportunity for our advertisers. I stress the word premium because it’s really important. If clients are shifting dollars from linear to connected TV, their expectation that it’s still in a very premium environment.
Looking at global media trends in the report, pure play digital, which excludes streaming audio, connected TV and digital OOH, is forecast to grow by 9.2% globally this year, beating the June forecast of 8.4%. However, digital is expected to decrease to 7.3% growth next year.
In 2023, 69.4% of global ad revenue is classified as digital, with that figure expected to reach 75.5% by 2028. Canada’s digital share of ad revenue this year is 68.9% this year and forecast to be 69.1% next year. These numbers exclude the digital extensions of traditional channels such as streaming audio, CTV and DOOH, which account for an additional 8.2% of revenue in 2023. By 2028, digital will be larger than the entire advertising industry was in 2022. This year Meta is on track to make USD$130 billion in ad revenue, which is 14.6% of total global ad revenue.
GroupM’s estimate for global retail media revenue in 2023 is USD$119.4 billion, a downgrade from the June forecast of USD $125.7 billion, due primarily due to factors impacting China’s retail market. Although the U.S. and China are still expected to represent 77.6% of global retail media ad revenue in 2024, they are predicted to be among the slowest growing.
Television, including CTV, is pegged to decline to just 17.9% of 2023 total global ad revenue. This is a smaller share of ad revenue than search or other digital advertising. GroupM expects total TV ad revenue to stay flat over the next five years, growing by only 1.1% annually.
Out-of-home (OOH) ad revenue is forecast to grow 10.3% in 2023, although it will not surpass 2019 levels until 2024 and is not expected to regain its pre-pandemic share of total ad revenue by 2028. The share of OOH is forecast to hover around 4.0% of total media through 2028. Digital OOH, as a segment of OOH, is expected to grow by 18.1% this year and grow by another 14.6% in 2024, accounting for $14.2 billion USD worldwide.
Audio ad revenue, including streaming audio, will total USD$26.4 billion globally this year, down 2.9% from 2022 and is forecast to grow just 0.4% in 2024. When looking at streaming audio separately, a five-year compound annual growth rate of 6.5% is expected. Terrestrial audio will fall 3.1% each year over the same period.
