We’re definitely not in the digital ad-pocalypse, but privacy changes, macroeconomic headwinds, and ad spend normalization led us to downgrade our US digital ad spend forecast by $5 billion for 2023.
While the overall market slows, not all categories will take the same hit. Social media is definitely in trouble, but connected TV (CTV) and retail media are in good shape.
Retail media is on the rise this year, with Walmart and Instacart growing the fastest. While Amazon’s ad business is growing slower than other retail media networks, its revenues are higher at $34.59 billion in US ad revenues. Walmart will see a fraction of that at $3.16 billion. Instacart’s ad revenues will be even lower at $1.12 billion.
The retail media boom is here, and it will flourish during a time of uncertainty for data collection and privacy.
Between 2021 and 2026, the US CTV ad market will more than double. Roughly $1 in $3 spent on TV advertising will go to CTV in 2025, up from less than $1 in $10 in 2019. As many throw around the word “recession,” CTV is primed for continued double-digit growth.
What’s getting in its way? The ad market for CTV is still incredibly fragmented and measurement is difficult. Without a unified system, advertisers will remain cautious.
It’s an ad world for digital video. The disparity between subscription and video ad revenues will rise over the next few years, and by 2027 digital video ad revenues worldwide will be more than $240 billion higher than subscription revenues, according to Omdia.
Last year, Netflix and Disney+ joined the ad world. Those lower-price tiers are the future for streamers looking to attract more users and boost ad revenues.
2022 was not Meta’s year. 2023 won’t be either. The company formerly known as Facebook spent billions of dollars building out its metaverse dreams this year, only to face online ridicule and massive layoffs.
Meta’s revenue loss is a reflection of social media advertising struggles everywhere. As privacy and data collection face an uncertain future, advertisers are wary of social platforms.
Chart to heart: The next few months will be challenging for advertising, but not all areas will be affected the same way. CTV and retail media are in great shape. Social media is less so. And across the board, challenges related to privacy and the economy linger.
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