Global ad revenue is expected to grow, but growth in digital may be hitting its peak

When it comes to predictions about the ad market, the last year or so has felt like “hope for the best, but expect the worst.” New data shows that the worst may be yet to come…if at all.

According to GroupM’s 2023 Global Mid-Year Forecast, global ad revenue (excluding US political advertising) is expected to grow 5.9% this year, totaling $875 billion. The growth number is consistent with the company’s December 2022 prediction, at which time it was reduced from 6.4% to 5.9%. Next year, global ad revenue is predicted to grow by 6%, Kate Scott-Dawkins, global president of business intelligence at GroupM, said.

“We are still looking at slightly negative real growth, but positive nominal growth,” Scott-Dawkins said on a briefing call with reporters.

While the possibility of a recession still seems to be up in the air, the report found that some things, like digital, can’t keep growing at a high rate forever, and new technologies like AI could soon be a main driver of industry growth.

The limit does exist: The report said that digital ad revenue is expected to account for 69% of ad revenue this year, or $599 billion, with single-digit growth over the next five years. But even with digital advertising making up more than two-thirds of global ad revenue, the report notes that growth at “historic double-digit rates has become difficult to achieve, and we expect digital to decelerate further over the next five years.”

Bright spots: One segment that seems to be doing particularly well, according to GroupM, is CTV, which is expected to add 10% in ad revenue on a compound annual basis between this year and 2028. Another is retail media, which is expected to grow nearly 10% this year and represent 14% of total advertising at $126 billion.

Can’t forget AI: GroupM predicts that the new, AI-focused businesses popping up will “likely drive ad growth in several years’ time as they look to grow their customers and revenue,” and could help support growth of “quality content.” On the flip side, the report also notes that “a flood of lower-quality content could fuel a race to the bottom and the erosion of audience trust in advertising.” In essence: We’ll see how this thing shakes out.