Why several U.S. ad forecasts predict a better 2024, and not just because of political spending

Vincent Letang, Magna’s evp of global market intelligence, based the increase on a few factors: a rise in GDP expectations for the year, as well as slowing inflation and strong job numbers so far. 

“The only caveat is the tepid consumption trend in terms of retail sales and slowing automotive sales,” said Letang in a prepared video Magna shared with the press. “Organic drivers remain a plus — we anticipate incremental brand spending driven by retail media as well as expanded AVOD opportunities.”

Including an expected $9 billion windfall in the second half of the year from political ads, Magna is forecasting a 9.2% rise in media spend to $369 billion.

As Letang’s colleague and Magna’s director of market intelligence Michael Leszega explained in the video, local media, direct mail and increasingly, digital media will likely benefit from what he cites as a 13% surge in ads over 2020. “The additional demand for media causes inflated advertising costs for non political advertisers, especially in battleground markets, like Ohio and Arizona,” he explained.

Hot ad categories, according to Magna, include retail (expected to spend 9% more), travel (also at 9%), as well as food & drinks, and automotive (both of which Magna pegs at 6% growth). Ad categories expected to decline include entertainment (down 4% from 2023) and technology sending essentially flat (+1%).

For his part, Wieser also attributes much of his increase in growth to improving GDP forecasts, but he added that it’s also the aggressiveness of online ad categories that tend to spend more — a trend that he thinks could last beyond 2024.

In his report issued on Monday, Wieser wrote, “e-commerce-based retailers — regardless of their domicile — are typically four times more ad-intense than physical retailers; online travel agencies are more ad-intense than traditional agencies; digital game publishers are more ad-intense than traditional game manufacturers, etc. As ad-intense competitors across the economy take share from those who are not, growth rates have the potential to remain above the mid-single digit level for several years to come.”

One standout in Forrester’s report is the realization that, in its estimates, social media has now overtaken linear TV in total ad spend, expected to hit just under $80 billion in 2024. But overall digital spend growth is going to ease down from its astronomical post-COVID growth in 2021 and ‘22 (respectively 39% and 13%) to around 7% from 2023 through ’28.

“One reason for this slowdown is none other than the law of large numbers: As the market continues to expand, it becomes more difficult to sustain large growth rates,” wrote analyst Cindy Liu in the report. Nevertheless, Liu expects digital will continue to expand its market share from 70% in 2023 to 76% in 2028.

Perhaps another contributor to the bolder growth projections comes from the world’s biggest ad spender: Procter & Gamble. Fresh off his appearance at the ANA Masters of Media conference last week, Marc Pritchard, P&G’s chief brand officer, posted a blog on LinkedIn that celebrates media spend as an essential, if expensive part of marketing.

“There’s a way of growing markets that doesn’t get the attention it deserves: MEDIA,” wrote Pritchard, “Media grows markets yet is perhaps one of the most underrated and underused ways of accelerating market growth. It’s generally the largest spending element in the marketing mix and can have a significant impact on market growth — positive or negative — but is often considered an expense to be cut when there are profit problems. However, when done well, media investment is a revenue generator that can make markets bigger.”

Every media outlet in the U.S. certainly hopes Pritchard will be heard by all marketers and their media agencies.