Latest Advertising Trends - 2024 Q2

Optimistic Outlook for Ad Spending

According to WARC’s Global Ad Spend Outlook report, global ad spending is set to surpass the $1 trillion mark for the first time in 2024. Shrugging off recession fears, WARC predicts that ad spending will continue to grow at 7.2% and 7.0% over the next two years, reaching $1.23 trillion by the end of 2026.

This forecast is encouraging amidst a challenging market influenced by high interest rates, rising inflation, military conflicts, and natural disasters, where many publishers struggled to maintain revenue. As 2024 progresses, this recovery trend is holding, supported by the fact that digital advertising revenues have returned to 2022 levels, with publishers reporting impressive Q2 earnings.

Dotdash Meredith, Dow Jones, Gannett, and The New York Times reported increased digital ad revenue in the second quarter of 2024, leading to totals exceeding the corresponding quarter in 2023. While BuzzFeed did not report an overall ad revenue increase, its programmatic ad revenue was up year over year for the first time since the first quarter of 2021.

Publishers' Q2 digital advertising revenue year over year (Digiday)

The predicted $1 trillion ad spend in 2024 is welcome news for publishers who rely on advertising as a core part of their revenue mix. However, it is tempered by the finding that total ad spend allocated to publishers continues to decline.

In this blog, we’ll explore significant trends in ad spending and share a few strategies for publishers to position themselves better to capitalize on this projected growth.

Ad Spend Drill-Down 

Digital pure-play platforms capture the majority of growth

According to WARC, online-only, ‘pureplay’ internet companies that exclusively operate online (Amazon, Google, and Meta, for example) are set to record a 14% rise in advertising revenue this year, reaching $735.7Bn and accounting for over two-thirds (68.7%) of the total ad spend in 2024. 

By 2025, these pureplay platforms will account for over 70% of worldwide ad spend. Leading digital growth in 2024 is retail media (+21.3%), social media (+4.2 %), and search (+2.1 %), accounting for over 85% of online spending and 58.7% of all incremental ad dollars spent on advertising worldwide. 

This growth is fuelled by 88.5% of this year’s incremental ad dollars spent on online-only businesses—52.9% of which are paid to just three companies—Alphabet, Amazon, and Meta—the largest beneficiaries from this period of expansion that have managed to attract seven in ten incremental ad dollars over the last ten years.

WARC: Global Ad Spend Outlook 2024/25

These figures are particularly significant as they exclude all digital extensions of traditional media, such as CTV, digital publishing, digital OOH, and digital audio. All these channels, their analog counterparts, and other non-digital media types competed for the remaining 33 percent of US ad revenues.

Social continues to outshine search.

Social media is the largest single advertising channel measured in WARC’s study, accounting for $241.8bn in total advertising investment in 2024. It is more popular than search engines for discovery among Gen Z and millennials.

Social media will account for 22.6% of all global ad spending this year and is forecast to rise to a share of 23.6% by the end of 2026. While Meta is the clear leader with a market share of 62.6%, Douyin and TikTok owner Bytedance are quickly gaining share and now account for almost a fifth (20.1%) of all social spending, up from just 9.3% five years ago. 

TikTok itself is on course to account for over half of its parent company’s advertising revenue for the first time next year, with ad billings estimated to hit over $28bn. However, uncertainty remains around TikTok’s future in the US.

As with most sectors experiencing growth, AI drives social media’s boom.

Search ad growth will soon plateau 

Search advertising (excluding retail media) accounts for 21.8% of global advertising spend, at a forecasted total of $223.8bn this year. WARC predicts that the consistent growth of search ads since 2013 will plateau in 2026 as more purchase journeys begin in retail media environments and social commerce begins to realize its potential beyond Asia.

Another potential headwind for search is the rise of AI-driven search and uncertainty around what the ad experience will look like for consumers more familiar with text-based search results. Google accounts for more than four-fifths of the global search market and its paid search revenue is set to top $200bn for the first time next year. 

Legacy media is shrinking

While the legacy media may have registered good growth this year due to major sporting events and a bumper US presidential cycle, James McDonald, director of data, intelligence, and forecasting at WARC, feels it is an ever-decreasing part of the media mix. Many legacy news brands have diversified their revenue streams to the point where print is often the smaller portion.

Amazon Ad’s Exponential Growth

Amazon's advertising services segment is thriving. In Q2, it generated $12.8 billion in revenue, representing an increase of $2 billion year over year. ​​The segment has earned an eye-popping $50 billion over the past twelve months and remains an essential contributor to the parent company’s profitability, according to CFO Brian Olsavsky.

While straightforward sponsored product listings drive most of Amazon’s ad revenue, the company counts on video advertising for even higher growth. Video is a promising opportunity for retail media networks like Amazon, with the financial resources and tech know-how to crack into more premium, upper-funnel advertising. Prime Video, for example, carries the type of programming that tends to be a magnet for ad dollars, including live sports.

Amazon plans to introduce the next generation of Ad Tech tools powered by advanced artificial intelligence and machine learning models that don’t require third-party cookies or ad identifiers. These tools will feature simplified technology, the control and transparency advertisers expect, and closer relationships between brands, publishers, and third-party services.

Amazon SSP: A unique platform for publishers

For years, Amazon’s strategy has been to enable advertisers to promote their products on Amazon. However, over the past couple of years, relatively under the radar, Amazon began expanding its advertising business by serving ads on external sites.

No one quite realized how big Amazon’s advertising business was until 2022, when it revealed that it generated $31.2 billion in revenue in 2021. Amazon is now wooing publishers to bolster its $50 billion ad business, offering publishers a significant opportunity to capitalize on this growth momentum. 

Amazon Publisher Services, its supply-side platform (SSP), is a unique demand source in many ways. 

First, it brings new quality advertisers to the table. Typically, SSPs bring in existing advertisers and route them through different ad networks to compete against each other. Amazon’s advertisers, in contrast, are distinctive, as they are primarily found on Amazon’s demand-side platform (DSP) and offer e-commerce products. This creates a new category of advertisers that Amazon introduces, which is only available through its SSP.

Second, Amazon possesses tremendous first-party data, which is critical in an age where third-party cookies are headed toward a slow death. When you purchase on Amazon, you voluntarily tell them where you live, what you like to buy, and what things interest you. This high-quality data enables publishers to serve more relevant ads to their users, leading to higher conversion, which enables publishers to charge more for ads.

Third, there are no third-party fees. Advertisers often go through third-party networks that charge a relatively large fee in return for their services, cutting down publisher revenue. Advertisers on Amazon cut out the middleman by going directly through Amazon while spending less on fees and more on their ads. This means more money reaches publishers when managed correctly.

Opportunity for publishers

Amazon’s continued push of programmatic advertising presents an excellent opportunity for publishers to monetize their websites and increase ad revenue. First, it offers a vast pool of quality advertisers that publishers can access to increase fill rates and drive revenue by selling a substantial part of a website’s ad space to Amazon advertisers.

Second, Amazon’s efforts fuel competition with Google and other advertisers, resulting in a higher demand for the publisher’s inventory. This increased demand enables publishers to leverage competition to charge higher CPMs to Amazon and Google. As Amazon grows, publishers will have greater leverage to use the competition between the two giants to negotiate higher prices.

AI Is Revolutionizing Digital Advertising

The global market revenue of AI usage in marketing is expected to reach 36 billion U.S. dollars in 2024 and grow to over 100 billion by 2028.

Market value of artificial intelligence (AI) in marketing worldwide from 2020 to 2028 (Statista)

AI’s impact on the ad tech space has been profound. It has changed how quickly, accurately, and effectively marketers can reach their audiences. This has enabled various use cases, including AI algorithms for audience analytics, generating personalized content at scale, leveraging efficient marketing automation, and using the power of predictive analytics. 

Marketers are using AI to automate ad buying and to assist in real-time campaign optimization and fraud detection. AI now helps marketers automate how they activate, adjust, and monitor their campaigns, including managing real-time bidding, programmatic advertising, and personalized advertising. It provides the ability to understand mass amounts of complex data, helping businesses, including publishers, to deliver greater ROAS (return on ad spend).

Digital Video Ad Spend Is Growing

The growth in mobile phone ownership and usage, combined with the popularity of short-form content on social media, makes video advertising a simple and accessible format that allows brands and individuals to reach and engage vast audiences.

Customers are more responsive to video content than text, regardless of which channel it lives on. This is because video content uses images, sound, and text to create an immersive experience. While this can pose a content creation challenge for marketers and publishers, technological advancements such as generative video AI have lowered entry barriers and investment costs, helping publishers scale video production using efficient, streamlined workflows.  

IAB’s 2024 Digital Video Ad Spend & Strategy Report expects digital video ad spending to be more than $62 billion this year, representing a 16% increase over last year and more than twice the $26 billion in 2020.

IAB 2024 Digital Video Ad Spend & Strategy Report and Martech

Since 2020, nearly 20 percentage points of ad spending have shifted from linear TV to digital video, which is set to capture 52% of video ad dollars this year, surpassing linear TV for the first time. This reflects viewers’ shift toward digital - for example, the largest pay TV providers lost 6% of their subscribers in the last two years: 5 million in 2023 and 4.6 million in 2022. 

Cookie-less alternatives are beginning to show promise

While third-party cookies in Chrome will continue, many advertisers are slowly moving away from cookies, and most are already working to run cookie-less campaigns. Post-cookie alternatives are beginning to show promise.

Identity resolution company IntentIQ recently generated some positive results with a media agency using an approach that blended cookie-based and cookie-less solutions in a partnership with an independent full-service agency, Involved Media, for a campaign executed for an education client. 

The campaign was executed over two months with Intent IQ’s IIQ identifier and included onboarding advertiser first-party data, building both cookie- and cookie-less-based look-alike audiences, activating audiences on the client’s preferred DSP and full-funnel attribution across all devices (Android and iOS), with an emphasis on cookie-less environments.

The cookie-less effort—executed across Safari browsers and iOS—generated a 77% improvement over targeted lead generation, which helped decrease the campaign’s cost per lead by 71% compared to the previous attempts.

Similarly, The Trade Desk’s Unified ID 2.0 (UID2) is also racking up some impressive wins with publishers, including BuzzFeed and The Washington Post, which incorporate UID2. CEO Jeff Green told investors in the recent Q2 earnings call that UID2 has “reached a critical mass of adoption.”

Conclusion

Despite economic headwinds, the advertising landscape remains optimistic, with global ad spending expected to surpass $1 trillion in 2024. While publishers face challenges like declining total ad spend allocation, the growing digital video market and possibilities opened up by the growth in Amazon SSP offer significant opportunities to capitalize on this momentum.