By Eric Haggstrom, vice president of business intelligence and head of forecasting
Advertising sales growth has largely disappointed over the past few years since a major growth spike in 2021. Elevated inflation, supply chain issues, and recessionary concerns caused many brands to reevaluate their media budgets and slow or even reduce spend. 2024 will be a major turning point. We’re expecting advertising spend will grow 10.4% in 2024, well above 2023’s rate of 6.1%.
What’s behind those expectations? Here are three key factors driving ad spending up as the year progresses.
- Some of this strong expected growth is due to spending tied to the November elections and the Olympics, but most will be driven by strong economic fundamentals. Unemployment has remained low and should continue to remain low. Consumer spending has continued to grow robustly. While growth in advertising will be strong this year, the market is incredibly competitive, and most incremental spend will flow to a limited number of advertising channels.
- Outsized growth for CTV as Upfront spending, political ad dollars and spending on the Olympics kicks in. On a quarterly basis, we expect growth in digital advertising to be relatively stable on a quarterly basis and grow between 12% and 14% in each quarter. This is our expectation for most channels as well. CTV will be a notable exception. We’re expecting 21.7% growth for the year, but a peak of 27.4% growth in Q3 as a result of the Olympics and the national election. Much of this growth will occur in the back half of the year, as we predict spending growth will be constrained Q2 before new Upfront spending deals kick in.
- Growth in DOOH. We are expecting a strong sequential acceleration in revenue growth from Q1 to Q4 in DOOH spend, driven in part by the election, but also by strong advertiser sentiment for the channel. DOOH has seen a significant amount of innovation in the past few years. Importantly, we expect digital screens in retail adjacent areas such as shopping center parking lots, gas stations, and EV charging stations will be a major growth driver given the contextual relevance of these placements. Retail media has become one of the largest ad channels based on its ability to deliver messages to people as they are actively shopping. DOOH sellers have the opportunity to benefit from proximity to in store retail.
The bottom line: The US economy is strong, despite geopolitical turmoil in Ukraine and the Middle East. Advertising sales will benefit, but growth will be driven by a relatively small number of channels and formats.
