Global advertising expenditure is poised to exceed $1 trillion for the first time ever this year. Notably, nearly half of this substantial expenditure is expected to be channelled towards three industry titans: Meta, Amazon, and Alphabet. This projection underscores the dominant role these tech giants play in the advertising world.
Surge in Global Advertising Spend
According to the latest WARC Global Ad Spend Outlook report for 2024/5, advertising spend is anticipated to rise by 10.5% this year, reaching an impressive $1.07 trillion. This growth is spearheaded by North America, forecasted to see an increase of 8.6%. Excluding election advertising, this figure is somewhat lower at 4%. Latin America and Europe are also set to experience growth, with projected increases of 6.2% and 5% respectively.
This upward trajectory is expected to persist, with the global ad market potentially reaching $1.23 trillion by 2026. Over the past decade, global ad investment has more than doubled, growing 2.8 times faster than global economic output since 2014.
Dominance of Meta, Amazon, and Alphabet
A striking revelation in the report is that Meta, Amazon, and Alphabet collectively account for more than 70% of the incremental advertising spend. Currently, their share stands at 43.6%, with predictions indicating this could rise to 46% by 2026.
These companies’ dominance is further emphasised by the significant revenue generated from digital advertising. WARC projections show pureplay internet companies are set to record a 14% rise in advertising revenue this year, totalling $735.7 billion.
Leading Sectors in Digital Advertising Growth
Retail media, social media, and search are primary drivers of digital advertising growth. Retail media is expected to grow by 21.3%, social media by 14.2%, and search by 12.1% in 2024. Combined, these three sectors account for over 85% of online advertising spend.
James McDonald, Director of Data, Intelligence and Forecasting at WARC, and author of the research, noted, “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.”
The Ascendancy of Social Media
Social media has emerged as the single largest advertising channel, overtaking search for the first time last year. This year, it accounts for 22.6% of all global ad spend, amounting to $241.8 billion.
Within this sector, Meta is the predominant player, commanding 62.6% of the market. Bytedance, with its platforms Douyin and TikTok, stands as Meta’s closest competitor, having increased its market share to 20.1% from 9.3% five years ago.
Search Advertising Dynamics
Search advertising, exclusive of retail media, constitutes 21.8% of global advertising spend, equivalent to $223.8 billion. Google holds a formidable 84% share of the global search market, with its paid search revenue expected to surpass $200 billion for the first time next year.
Excluding China, Google’s share of the global search market ascends to over 90%. The dominance of Google in this sector highlights the continuing importance of search advertising in the digital ad landscape.
Retail Media’s Rising Influence
Retail media is anticipated to make up 14.3% of global ad spend this year, totalling $152.6 billion. This sector’s rapid growth underscores the increasing importance of retail media in the overall advertising mix.
The value of first-party data and AI enhancements in delivering targeted advertising cannot be overstated. These advancements are poised to shape the fabric of the advertising industry for years to come.
Performance of Legacy Media
Legacy media, including print publishing, broadcast radio, linear TV, cinema, and out-of-home (OOH) advertising, now collectively represent 25.3% of total advertising spend. This segment has recorded a decline in share over the past 15 years.
However, there is a slight increase in legacy media spend this year, totalling $270.5 billion, largely attributed to US political advertising.
Regional Insights: Europe and UK
Regionally, the UK is the largest European market by ad spend and is expected to see an 8% increase, reaching £38.5 billion in 2024. This growth is reflective of broader trends in the European advertising landscape.
In conclusion, the dominance of Meta, Amazon, and Alphabet in the global advertising market is set to continue, with significant growth in digital advertising channels such as retail media, social media, and search. Legacy media, while still relevant, is witnessing a shift in its share of ad spend. As the global advertising landscape evolves, these trends highlight the critical role of data and AI in shaping the future of the industry.