Ad spend continues to grow faster than the GDP, fueled in no small part by connected TV (CTV), retail media, social media, and search.
From 2019 to 2028, total media ad spend in the US is projected to grow at an annual rate of nearly 9%, compared with only 3.9% for the GDP, according to data from the International Monetary Fund, the World Bank, and the Congressional Budget Office.
In the days of traditional media, advertising was primarily the purview of companies promoting products tied to the GDP, like automotive and travel, said our analyst Paul Verna, co-author of our Ad Spending Benchmarks: Q3 2024 report. As advertising became more digital and more service companies became central to the ad industry, that connection was somewhat broken.
“Obviously, digital is no longer new, but there’s still a growth curve more aggressive than anything we saw with traditional media,” Verna said. “It’s just a very vibrant space, despite some ups and downs.”
US CTV ad spend will grow 10% annually through 2027.
This is spurred not only by dollars CTV is snatching away from linear TV, but also by new players. “There’s a group of advertisers that didn’t advertise on traditional TV, but do advertise on connected TV,” said Verna.
The election is also shining a spotlight on CTV, because of the demographics it can reach, he added. “The median age of traditional TV viewers continues to rise, and CTV reaches the sweet spot of millennials. So it's a very different audience.”
Advertising is also a growing part of business for not only streaming services like Netflix and Amazon, but YouTube as well. “At first it was a very desktop-oriented platform, and then a mobile platform,” he said. “It falls in between what we think of as user-generated content and a traditional streaming service, and it's a force to be reckoned with.”
Retail media continues to drive digital ad spend growth.
In 2018, digital accounted for just under 50% of total US media spend. By 2028, it will comprise 86%. While CTV was the dominant force behind the increase for several years, retail media is taking over.
“We used to think of Google and Facebook as a duopoly, but now it’s really a triopoly with Amazon, which will make nearly $42 billion in advertising this year,” said Verna.
Another factor that will influence the future of retail media is the emergence of commerce media, where non-retail players in verticals like financial services adapt the model to monetize their own data. More than half of brands (58%) and agencies (51%) are interested in retail-media offerings from non-retail verticals, according to Q4 2023 research from Criteo.
Social network ad spend is growing at a pace comparable to search.
Meta is still a dominant player in the social space primarily because of Instagram, and to a lesser degree Facebook, said Verna. But while TikTok’s future is uncertain in the US, it is still a big force where significant ad spend and cultural influence is happening, said Verna.
“TikTok is injecting a new kind of energy into [social and] it’s changing the landscape,” he said. “There’s a tight connection between the social space and the creator space. It’s definitely not surprising that spending around social is holding its own [compared with search].”
Social is driving change in search, primarily because younger generations, particularly Gen Z, regularly use TikTok as part of their search process, he said.
“From a monetary standpoint, search is built predominantly around search engine ads,” he said. “But some of the things that are likely to disrupt search are still in their infancy.”
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