Like a Marvel actor the night before his big shirtless scene, the ad market is “healthy and maybe unsustainably strong” this year.
That’s the assertion (not the Marvel analogy, though) of Madison and Wall principal Brian Wieser, who published the advisory firm’s latest ad spend report on Wednesday.
Per the report, the advertising industry has enjoyed an unusual three consecutive quarter trend of near double-digit growth, including 9.6% growth in Q2 this year (not including political advertising – more on that in a bit).
But Wieser believes things will naturally decelerate in the back half and eventually level out to a more typical, mid-single-digit growth rate – down from 7.2% overall in 2024 to 5.3% in 2025.
“These kinds of levels of outperformance are not normal,” Wieser told AdExchanger. “So whatever the factors supporting them, it’s hard to imagine them persisting.”
Media owners should keep this in mind as growth tails off, Wieser said. “They need to make sure that they’re mindful of whether or not their assumptions are realistic, or what needs to be true for their assumptions to be realistic.”
Threats of incoming normality aside, other interesting trends stand out in the report as well.
Digital letdowns
Digital advertising accounted for almost two thirds of the industry’s ad revenue during the past quarter and grew 16.4% in Q2 – almost double its 2023 Q2 rate of 8.7%, in fact.
However, Wieser predicts digital growth will slow down with the rest of the advertising market, warning of potential deceleration factors like retail media networks losing momentum or Chinese cross-border advertising demand drying up.
Meanwhile, the “open web” still hovers around the bottom of the digital advertising barrel with an even slower predicted growth rate of 3.1%.
Marketers were already wary of open-web publishers out of concerns over cookie deprecation, brand safety and made-for-advertising sites. Now losing the highest-profile industry standard GARM makes adopting this type of inventory even more fraught.
“All of them are essentially ancillary buys,” Wieser admitted of open web publishers. “It’s only worth putting so much effort into working with any of them, and if they don’t have a common standard, it makes it more expensive to work with them.”
Olympic underperformance
Last year, Wieser predicted that national TV ad spending would decrease by 2.3% in 2024, a slight blip between larger periods of decline in 2023 and 2025. However, now it looks more like a decrease of 1.2% for the year.
In Q3 this year, as a matter of fact, TV may actually rise up to a 3.7% growth rate, possibly left over from shifting media budgets during the Olympics.
Which means, of course, the growth won’t last. And what’s more, it probably won’t look all that statistically significant once we’re further out from the actual Olympic broadcasts.
That’s because many marketers use their conventional media budgets to fund Olympics ad spend, meaning they typically cut it from somewhere else, ironing out its potential impact overall.
“If I showed you quarterly data without identifying the media owners, and you didn’t know how the Olympic Committee organized itself, and I asked you to identify [which was] an Olympics quarter, you wouldn’t be able to do it,” Weiser said.
That might change slightly in 2028, when Los Angeles hosts the Olympic Games, as there may be some additional incremental spending in Southern California especially. But generally speaking, the Olympics won’t be enough to salvage TV advertising – linear ads in particular – from secular decline.
Political stalling
Unlike the Olympics, political advertising does impact the advertising industry when stacked against other trends.
However, according to Wieser’s forecasts, only 14% more spending on political advertising will take place in 2024 compared to this same time in 2020.
Compare that to the last two presidential election cycles, when growth was up 40% in 2016 and a whopping 112% in 2020 – an increase that can be partly attributed to factors like the pandemic, Donald Trump’s nomination in 2016 and Michael Bloomberg and other well-funded presidential bids.
In contrast, this year’s political ad spend was much less robust during Q1 and Q2, possibly due to lack of enthusiasm for both major presidential candidates (up until six weeks ago, at least) and for local candidates across the board.
Which isn’t to say political spending will completely evaporate after Election Day in Q3. The two Georgia runoffs in December 2020 generated nearly $500 million of additional ad revenue.
Still, it likely won’t hit those same levels where ad growth is concerned, even if recent excitement for Kamala Harris’ campaign brings us “back to normalcy,” as Wieser put it.
“Even if you get a lot of fundraising through the remainder of this year, will it necessarily be above 2020 levels? I mean, probably, but it just won’t be as fast a growth rate as we’ve seen,” he said.
