The rise of technology ad spend in 2024
The technology sector will see a 7.1% increase in ad spend in 2024, according to the latest dentsu Global Ad Spend Forecasts, well above the average growth rate of 4.6%. The industry is, by definition, very innovative, and the recent breakthroughs in generative AI will start to bear fruit in a new range of products and services, giving companies greater motivation to advertise to ensure their products gain market share.
AI powers the industry recovery
News of developments in generative AI are making headlines around the world, and these advancements are starting to translate into new products and services for both businesses and consumers, including enhanced search and paid productivity tools. Many of these are likely to become publicly available in 2024, creating a need to advertise as companies compete for market share in a brand new market.
The last big land grab in technology was for cloud computing and storage, which led to many organizations and individuals taking out subscriptions simply to be able to continue to run their businesses and their lives. The race for market share in AI looks set to follow a similar trajectory from 2024, giving all the major players a sense of urgency to establish their brands and reputations in the field.
This could also drive smartphone sales. Recent reports project increases in shipments in 2024, driven by new features like enhanced photography, speech recognition, and built-in ChatGPT-like features, processed directly in the phones rather than on the cloud.
This is good news for a sector that has recently seen a contraction, driven by a combination of consumers and businesses tightening their belts in the face of the higher cost of living, in addition to natural replacement cycles for hardware. Many consumers bought new devices - including new laptops, smart TVs, games consoles and peripherals - during the lockdown when they had to spend more time at home. Three years later, a proportion of these now need replacing, and this will be another driver of demand.
A year of big events
In addition to developments in technology, 2024 is also going to be a very big year for events, with the Olympics and Paralympics in Paris, and both the Euro 2024 and 2024 Copa América football tournaments, capturing viewers and offering lots of marketing opportunities across different media touchpoints.
Technology likes to be at the forefront of media innovation, and there are also some high-profile new opportunities available to marketers, for example, The Sphere in Las Vegas which is proving to be a great out-of-home canvas for advertisers to create memorable experiences which often get shared on social media.
But there are also challenges ahead, the biggest of which is computing capacity, or compute. The supply chain issues seen in 2022 are largely over, but new developments in AI take up huge computing resources, including chips and cloud processing, forcing some companies to restrict access and introduce waiting lists, rather than be open to any customers who want to buy. Just as other sectors must cut back on ad spend when supplies of their products run low, we could see a situation where new products become so successful that to avoid demand exceeding the available capacity, the company simply does not need to advertise.
Educate and explain
The role of a lot of tech advertising in 2024 will be to educate and explain. End users will need to be educated on the benefits and use cases of the new AI tools and products. At the same time, companies will need to explain what the new tools can do, how they can be used to the best advantage, and help users cut through confusion and unrealistic expectations. Advertising will have a strong role to play in this area, particularly in the range of different digital formats available including videos and branded content.
Take smartphones, for example. Smartphones introduced a completely different sort of computing with apps like Uber and Instagram allowing people to do things that fitted the form perfectly. There was an education phase while people grew to understand how something like booking a ride could simply work better on a mobile device than it ever could on a desktop.
On the other hand, there are many concerns among the public about the possible negative effects of AI on society, including its impact on jobs in some industries including creative and finance. Again, tech advertising will have a strong role to play, with brands needing to explain what is happening in as clear and transparent a way as possible, and cutting through misinformation and highlighting the positive benefits of AI in people’s lives and work.
Technology companies will need to increase their ad spend in 2024 to capture the increased demand, sell the new services, and explain how they can be used for good. Download the new dentsu Global Ad Spend Forecasts to stay on top of what is happening in a very dynamic year.