Dentsu Predicts 46% Growth in Advertising Industry as Brands Emphasize Attention over Reach

Article Brief:

The latest Dentsu forecast projects that global advertising spending will see a 4.6% increase in 2024, reaching $752.8 billion. This growth rate surpasses that of the industry's performance in 2023.

On the other hand, the agency network warned that the rise in media pricing could be obscuring the outlook for next year. When examining global ad spending at consistent rates, the growth for 2024 is estimated to be around 2.5%, compared to the 2.7% growth seen in 2023.

Digital advertising will continue to lead the way, representing $442.6 billion, or 58.8%, of the ad market in 2024. However, despite experiencing single-digit growth for the first time, this channel is projected to continue on a slower upward path in 2024 (with a 6.5% increase) and beyond.

Article Insight:

Dentsu, along with other agencies, is gearing up for a more robust period of advertising growth in 2024, albeit with certain conditions. The optimism for next year is largely based on the occurrence of major cyclical events that are expected to benefit struggling marketers, such as the Olympics, UEFA Euro 2024 football championship, and the U.S. presidential election. The overall growth rate for 2024 seems to surpass that of this year, but this is mainly due to the impact of media pricing inflation.

Dentsu, for the first time, has expanded its research to include metrics such as gross domestic product (GDP) and population in relation to ad spending, due to the complexities of analyzing today’s market. It is anticipated that advertising in 2024 will account for an average of 0.75% of GDP among the countries tracked by the agency. This figure is slightly higher than the historical average, with Japan, the U.K., and the U.S. making up a significant portion of ad spending.

Brands are also facing increasingly higher costs to reach individual consumers in a highly fragmented media landscape. According to Dentsu, next year advertisers are expected to spend $139 per capita at the global level, marking a 75% increase from two decades ago.

Will Swayne, president of Dentsu's global media practice, emphasized the increasing challenge of capturing audience attention in the face of a growing number of ads. In response, brands are shifting their focus from sheer reach to capturing and maintaining audience attention to maximize returns and take advantage of available attention economy tools.

The demand for precision may account for the fact that digital advertising now makes up more than half of total ad spending. Retail media is expected to experience the fastest growth, with a 17.2% three-year compound annual growth rate, likely due to changes in ad-targeting methods. This will be followed by social media with a 12.3% three-year CAGR and programmatic media with a 10.2% three-year CAGR. Despite programmatic media accounting for over 70% of digital investments, there is a growing concern about wasted spending on nonviewable inventory and clickbait websites.

Dentsu anticipates that TV will see a 2.9% increase in 2024, in contrast to other agencies. This growth is linked to major events such as the Olympics. Additionally, Connected TV is projected to experience a significant 30.8% growth as streaming platforms enhance their ad-supported businesses. Amazon Prime Video plans to incorporate commercials in Q1, and competitors like Netflix and Max are expanding their brand partnerships. Magna, the media investment arm of IPG, also predicts that Amazon's increased focus on advertising will profoundly impact the industry.