According to a recent eMarketer forecast, paid search spend is expected to reach $110 billion this year. This makes up 41.8% of total digital spending and is projected to grow by 8.2%, slightly higher than overall U.S. digital ad spend, which is expected to increase by 7.8%.
Within the search category, retail media networks (RMNs) are gaining traction with 18.7% growth in retail media search. By 2023, spending in this segment is projected to reach almost $30 billion. RMN digital ad revenue, not just in search, is expected to increase from $31 billion in 2021 to $45 billion this year and could surpass $106 billion in 2027 if spending continues at its current rate.
eMarketer Forecast for U.S. Digital Ad Spend
Growth in digital ad spending is expected to experience a slight dip below 10% for the first time in 14 years. However, it is projected to rebound with a growth rate of 11.2% in 2024, and yearly increases around 10% through 2027. In 2021, digital ad spending experienced a significant rebound with a growth rate of 37.6% following the initial wave of the COVID pandemic. However, in 2022, the growth rate fell to 10.6%.
eMarketer Forecast for Display and CTV
Over half of digital spending is dedicated to display ads, which are expected to grow by 7.9% this year. However, CTV’s projected growth for 2023 is 21.2%, almost triple that of digital’s growth. This year, CTV ad spend is expected to reach $25 billion and make up 9.5% of total digital ad revenue, according to eMarketer. On the other hand, social display is only projected to increase by 3.4% in 2023. Social network display advertising accounts for about a quarter of total digital spending.
Final Thoughts
In 2023, the search industry is expected to face challenges. Changes related to generative AI and chat in search on Google and Bing have created uncertainty about engagement and ad performance. More clarity is needed to understand the impact of these changes. Despite this, the overall paid search spend growth is rising, particularly in the retail sector.
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