Recent Updates in Digital Advertising You Should Know
Global digital ad spending is set to increase by 8.4% in 2023, the lowest growth rate since 2009. However, this decline is not due to economic challenges but is rather a consequence of the digital advertising industry’s impressive success. The report predicts that digital pureplay ad revenue will be a major driver, contributing 68.8% to overall ad revenue growth in 2023, and is expected to reach 74.4% by 2028. The single-digit growth rate reflects the maturity and size of the digital market rather than the economic downturn.
Connected TV (CTV)
In 2023, traditional TV revenue globally, excluding U.S. political advertising, is projected to decline by 1.2% to $133.6 billion, while connected TV revenue is estimated to surge by 13.2% to $25.9 billion, showing a promising growth trend. Over the next five years, connected TV revenue is expected to grow at a compound annual rate of 10.4% to reach $42.5 billion. Meanwhile, digital out-of-home is thriving, with an anticipated increase of 26.1% to $13.3 billion, surpassing the growth rate of the overall out-of-home sector, which is predicted to rise by 12.7% to $35.6 billion in 2023. On a global scale, ad spend (excluding U.S. political advertising) is set to grow by 5.9% to $874.5 billion in 2023, and another 6% the following year. In the U.S., ad spend will increase by 5.1% to $322.5 billion this year and 5% in 2024. However, these numbers could potentially be impacted by a projected 7% inflation rate in 2023, leading to a net loss in real terms.
In Contrast: Twitter’s Digital Advertising Decline
Linda Yaccarino has taken on the role of Twitter CEO amid significant challenges in the platform’s advertising revenue. According to an internal presentation obtained by The New York Times, Twitter’s advertising revenue has seen a staggering 59% year-on-year decline. Elon Musk, who acquired and privatized Twitter for $44 billion, had expressed optimism about advertiser returns and predicted profitability. However, uncertainties persist as Twitter struggled to meet weekly sales forecasts, with U.S. ad revenue reaching only $88 million during the five weeks from April to May.
Advertisers’ concerns about hate speech, explicit content, and the promotion of online gambling and marijuana products led to an exodus from the platform, causing Twitter’s U.S. ad revenue to plummet by at least 56% compared to the previous year. The advertising sector is vital for Twitter, accounting for 90% of its revenue. The strained relationships with advertisers, coupled with the reduction in spending from major brands like General Motors and Volkswagen, further contributed to the challenges. Key advertisers, including Apple, Amazon, and Disney, reportedly scaled back their investments on the platform, and high-value banner ads often remained unsold. Public relations issues with major advertisers, such as the mistaken endorsement of an unaffiliated account called @DisneyJuniorUK, added to Twitter’s troubles. As Linda Yaccarino takes the helm, she faces the crucial task of revitalizing Twitter’s advertising sector and restoring trust among major advertisers.
