Latest 2023 Dentsu Ad Spend Re-forecast Shows: Digital Reaches Maturity In The Marketing Mix

• Global advertising spend expected to grow by 3.3% in 2023 with inflation driving increase to reach US$727.9 billion 
• Stronger growth ahead, with 2024 global advertising market now expected to increase by 4.7%, to reach US$762.5 billion, with a further 3.8% growth into 2025 
• Australian market forecast to grow by 3.2% 
• Digital projected to settle into almost consistent incremental growth for three years, to account for around US$3 in every US$5 spent in advertising worldwide. 

Advertising investment is forecast to grow by 3.3% globally in 2023, with the Australian market forecast to grow by 3.2%, according to the latest dentsu Global Ad Spend Forecasts report. 

Overall, an anticipated US$727.9 billion will be spent worldwide by the end of the year, according to this mid-year ‘reforecast’ of the twice-yearly report. 

The adjusted dentsu Global Ad Spend Forecasts for 2023 points to continued growth, albeit adjusted marginally downwards from the 3.5% predicted in the December 2022 report, in the most part due to macroeconomic factors. Exploring behind the headlines, the report also shows growth driven by media price inflation rather than increased advertising volume, where advertising spend at constant prices is expected to decline slightly, with –0.6% reduction year on year*. 

The global outlook however, as forecasted by dentsu specialists in almost 60 markets, is more positive, with spend set to accelerate faster in 2024, increasing by 4.7% to reach US$762.5 billion. This boosted ad spend is being driven by major sporting and societal focal events such as UEFA Euro Championship and the US presidential election. 

Asia-Pacific is forecast to experience the greatest pace in 2023, with ad spend forecast to grow by 4.6%, with higher-than-expected ad spend growth in China and a very dynamic Indian ad market. In Australia, ad spend growth will continue to slow down in 2024, forecast to grow by 2.4% and then 2.2% in 2025. 

Craig Cooper, Chief Investment Officer, Carat Australia said: “Dentsu’s mid-year ad spend forecast for 2023 in Australia has been marginally lowered to 3.2% YOY growth due to a softening in the economic outlook. Australia’s CPI inflation rose to a 32-year high in the calendar year to December 2022, driven largely by sharp price increases on cost of essentials driven by supply shortages. This set off further interest rate rises and has escalated cost of living pressures on households. “While market volatility was expected to impact the first half of 2023, we are forecasting Q3 and Q4 to be positively impacted by the stabilisation of client marketing budgets and of both local and global sporting events including the AFL and NRL finals, the FIFA Women’s World Cup and Rugby World Cup.” 

Globally, 2023 will see digital continue to grow, but in an uncharacteristic single digit increase (7.8%), which has only happened twice before in the last 20 years: in 2009 (financial crisis consequences) and in 2020 (COVID-19 pandemic). Looking ahead, single-digit growth in digital is expected to become the norm, with a fairly consistent dollar increase year on year for 2024 and 2025 (circa US$26 billion), against a backdrop of around 60% total market share. 

Peter Huijboom, Global CEO, Media international markets, dentsu said: 

“For years now we’ve seen the industry pivot towards digital, more than doubling investment in the last five years, thanks in part to the almost unlimited potential to reach, engage and sell to individual consumers. It has been one of the big drivers for growth, but with finite marketing budgets available to brands – it’s clear we are now starting to reach a point of digital maturation within the campaign mix alongside more traditional channels. 

“There are still some markets, for example India where the digital potential is in its adolescence, who continue to see rapid growth in digital spending – contributing to the global uplift. But it is also through innovations in tech, updated platforms, new channels and changes in planning behaviors, we’ll retain this consistent growth within digital investment worldwide.” 

Digital spend is expected to reach US$424.3 billion by the end of 2023, accounting for 58.3% of all advertising spend, this will increase further to 59.1% share in 2024 and 60.3% in 2025**. Emerging digital categories are expected to continue to experience high growth in 2023, such as retail media (18.0%) and connected TV (15.2%). The preference for programmatic buying is also on the up, with advertising spend transacted programmatically forecast to increase by 14.4%, to reach 71.4% share of digital spend in 2023. 

From a channel perspective, the 2023 dentsu Global Ad Spend Forecasts outlook is now showing a mixed forecast with perhaps, most notably, a drop within the television ad spend for the year. TV ad spend is now expected to fall by -3.1%, totaling US$170.2 billion by end of year, which in itself appears to be a temporary blip in its typically upward spending trend, with positive growth returning for 2024 onwards. 

Except for print ad spending, which continues its decline (-4.8%), the other media channels are holding ground, with incremental year on year increases for Out-of-Home (+3.8%), cinema (+2.1%) and audio (+0.8%). “This pattern of spending, based on our long-term extrapolations, could see Out-of-Home surpass print spend and become the third most popular format, sometime during 2026,” observes Huijboom, who adds: “Of course, we’re excited about the impact Generative AI could have on our industry with the arrival of new in-channel opportunities for brands to embrace, so we’ll need to see if it remains the case.” 

Looking to 2024, in Australia the 2024 Paris Olympics and state elections in Queensland, Northern Territory and the ACT are expected to drive market ad spend. A federal election due by May 2025 will also generate growth in government spending in the lead-up. 

This dentsu Global Ad Spend Forecasts report not only looks at the data from 58 markets, but also examines some of the key factors impacting the regions, advertising sectors and sustainability. The full dentsu Global Ad Spend Forecasts can be downloaded for free here: dentsu.com/ad-spend-may-2023

-ENDS- 

PRESS CONTACTS
Global: John Mayne / +44 (0)7929 856 435 john.mayne@dentsu.com / media.pressoffice@dentsu.com 
ANZ: Miranda Ward /  Miranda.ward@dentsu.com 

NOTES TO EDITORS 

*Constant price analysis, net of inflation, was conducted in the top 12 spending markets: USA, China, Japan, UK, Germany, France, Australia, Brazil, India, Canada, Italy, Spain. ** Specifically referencing pure play digital platforms, does not include spending by advertisers on the digital extension of traditional media (which is accounted within media channel totals). 

About the dentsu Global Ad Spend Forecasts: Advertising expenditure forecasts are compiled from data collated from dentsu agencies until the second half of April 2023 and based on local market expertise. Dentsu uses a bottom-up approach, with forecasts provided for 58 markets covering the Americas, Europe, Middle East, and Africa, and Asia-Pacific by medium: digital, television, print, out-of-home, audio, and cinema. The advertising spend figures are provided net of negotiated discounts and with agency commission deducted, in current prices and in local currency. Global and regional figures are centrally converted into US dollars at the April 2023 average exchange rate. The forecasts are produced biannually with actual figures for the previous year and latest forecasts for the current and following years all restated at constant exchange rates. While ad spend for the Russian market was present in the January 2022 edition of the dentsu Ad Spend Forecasts, this has been removed from subsequent editions and all values for previous years, referenced in this edition, have similarly been adjusted for accurate comparison. Note historical ad spend figures have all been restated to constant exchange rates from April 2023. 

About dentsu: Dentsu is the network designed for what’s next, helping clients predict and plan for disruptive future opportunities in the sustainable economy. Taking a people-centered approach to business transformation, dentsu combines Japanese innovation with a diverse, global perspective to drive client growth and to shape society. https://www.dentsu.com/ https://www.group.dentsu.com/en/