WARC has predicted that global ad spending will top $US1 trillion for the first time this year, up 10.5 per cent. That’s $AU1,595,370,000,000 if you’re counting.
WARC expects ad spend to continue growing next year (up 7.2 per cent) and in 2026 (up seven per cent), culminating in a global ad market worth $US1.23trn. Global ad investment has more than doubled over the last decade and has grown 2.8 times faster than global economic output since 2014.
Just three companies – Meta, Amazon and Alphabet – account for more than 70 per cent of this incremental spend. This trifecta is expected to attract 43.6 per cent of all advertising spend this year, rising to a share over 46 per cent by 2026.
WARC’s projections show that ‘pureplay’ (i.e. online only) internet companies are set to record a 14 per cent rise in advertising revenue this year, reaching a total of $US735.7bn.
In total, almost nine in every ten (88.5 per cent) incremental dollars spent on advertising this year will go to online-only businesses, with half (52.9 per cent) being paid to Alphabet, Amazon and Meta. Taken together, pureplay platforms are set to account for over 70 per cent of all advertising spend worldwide next year.
James McDonald, director of data, intelligence and forecasting, WARC, and author of the research said: “The global ad market has doubled in size over the last decade, with advertising investment growing almost three times faster than economic output since 2014. Three companies – Alphabet, Amazon and Meta – have been the largest beneficiaries from this period of expansion, attracting seven in ten incremental ad dollars over the last ten years.
Regional spend
However, while ad spend in North America is to grow 8.6 per cent this year to $US348bn, the APAC market will see growth cool to two per cent, with a value of $US272bn.
Europe is set for a five per cent jump to $US165bn, Latin America up 6.2 per cent to $US32.1bn.
Meanwhile, ad spending in the middle will be Middle East “largely unaffected” by the looming threat of regional conflict and will grow 4.2 per cent to US$12.6bn
APAC’s largest market – China – is projected to see ad market growth of 6.4 per cent this year to RMB1.32trn ($US181.2bn), an easing from the 9.3 per cent rise recorded in 2023 as consumer demand remains soft and economic expansion lags stubbornly behind the target. Pureplay internet will account for more than 86 per cent of the Chinese ad market in 2024, though social media and retail media will expand at a slower rate this year than last, at 10.5 per cent and 8.2 per cent, respectively.
Channel spend
Retail media (+21.3 per cent), social media (+14.2 per cent) and search (+12.1 per cent) are set to lead digital growth in 2024, with these three sectors alone accounting for over 85 per cent of online spend and almost three in every five (58.7 per cent) incremental dollars spent on advertising worldwide this year.
All are benefiting from the increased adoption of AI-driven ad services and growing appreciation of first-party data.
“With retail media expected to lead ad spend growth over the coming years, and with new, diverse players emerging in ad selling – from Uber to Chase – we are once again seeing the value of first party data in targeting the right person with the right message at the right time. Such data, combined with new AI enhancements, will constitute the fabric of the advertising industry for the next decade and beyond,” added McDonald.
Sector spend
Retail – the largest of the 19 categories monitored by WARC – is anticipated to record a 2.5 per cent dip in global spend this year.
WARC’s definition of this sector is broad, however, ranging from quick service retail (QSR) to grocery to department stores to online retailers, such as Temu. The latter is expected to continue investing heavily in advertising, particularly in Europe this year, but it is an exception – the longer tail of retailers are facing business pressures from soft consumer demand.
Technology & Electronics – the third-largest product sector monitored by WARC – is expected to post the fastest growth this year, with incremental spend of $US17.0bn worldwide.
The sector had recorded declines in advertising spend in both 2022 and 2023, as central banks raised interest rates sharply in an attempt to stymie inflation, exposing over-leveraged tech startups in particular.
Technology & Electronics will see a 13.2 per cent lift, Alcoholic Drinks will climb 12.2 per cent and Clothing & Accessories 11.1 per cent.
These sectors are expected to lead ad spend growth among consumer-facing products in 2025, though Business & Industrial, the second-largest category, is expected to be the fastest-growing category overall next year, up 18.2 per cent, as budgets unlock during a period of comparatively favourable economic and trading conditions.
The Nicotine category is also growing rapidly, albeit from a low base; it is the smallest of the 19 product categories monitored by WARC at $US13.0bn in 2024.
Spend is set to grow 56 per cent over the three years to 2026 – reaching a total of $US17.2bn – driven almost entirely by vape products which skew heavily towards online advertising.
