This summer has given the ad industry several reasons to be cheerful. Not only is “out of office” season well underway, but after a cloudy start to 2023, the market’s outlook is slightly sunnier, too.

The ad revenues of major tech platforms, responsible for driving a downward trend in previous quarters, are sprouting green shoots. Alphabet, Microsoft and Meta all showed growth during their quarterly earnings reports this week, with AI technology proving a catalyst. (See below for detailed earnings)

However, with the global economy flat over the last three years, and inflation remaining stubbornly high, macroeconomic headwinds continue to bear down on the industry.

Signs of life

At the end of July, the International Monetary Fund (IMF) raised its global GDP estimate for the year to 3% (0.2% ahead of its previous forecast in April). It expects the same level of growth next year while global inflation is expected to fall from 6.8% in 2023 to 5.2% in 2024. That will offer some confidence among companies around the ability for consumers and companies to spend more freely in the coming months.

Almost all our advertisers are using at least one of our AI-driven products.

— Mark Zuckerberg, Meta CEO

The first real signs of positivity began to emerge with GroupM and Dentsu’s spend forecasts in the summer.

Dentsu’s bi-annual spend report predicted a 3.3% rise globally in ad investment this year to $727.9 billion—up $23 billion from 2022—followed by a further increase of 4.7% in 2024 and 3.8% in 2025.

Next year, spend is expected to accelerate again to reach $762.5 billion, partially due to the Paris Summer Olympics and Paralympics, the UEFA European Championship and the U.S. presidential election.

“We still expect global advertising spend to grow despite the economic uncertainty,” Peter Huijboom, CEO of international media at Dentsu said. “However, media price inflation is the true driver of this increase and hides the more lackluster reality: 2023 will be a flat year for ad spend.”

By geography, the fastest growth market is projected this year to be Asia-Pacific by 4.6%, followed by the Americas by 2.9% and EMEA by 1.9%.

Digital spend is also driving growth, forecast to account for 76.7% of all 2023 spend, and 77.6% in 2023, compared to 75.1% in 2022.

“The recent higher-than-expected fall in inflation will hopefully continue and with that we will see confidence begin to build later in the year and into 2024, when the ad market is expected to return to growth,” said Stephen Woodford, CEO of the Advertising Association.

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