Market Overview: Organic and Cyclical Factors Combine to Generate Historically Strong Growth in 2024

The winter update of MAGNA’s “Global Ad Forecast” reveals that media owners’ net advertising revenues (NAR) reached $933 billion in 2024, growing +10.3% over 2023. This is in line with MAGNA’s mid-year prediction (+10.0%) and a significant acceleration on the global growth recorded in 2023 (+6.4%). +10.3% is the strongest growth rate observed by MAGNA in 25 years (excluding the post-COVID surge in 2021 of +23%).

Why such strong growth in a rather lukewarm economic climate?

The exceptional number of cyclical events (including elections in India, Mexico and the US, Paris Olympics, UEFA Euro 2024, Copa América hosted by the US) were a factor, but MAGNA believes that excluding the incremental ad sales generated by these events the market would still have grown by +9.0%. The other – and main – growth factor is therefore to be found in organic market drivers in four categories:

1. Commerce/Retail media Drives Digital Media Spending. As more and more product categories shift from in-store towards ecommerce, brands have adjusted their marketing efforts accordingly. CPG/FMCG brands can reallocate some of the amount negotiated with major retailers in trade marketing agreements, from in-store channels towards the digital ad formats offered by retail media networks. This allows brands to grow digital ad spend significantly without having to increase total marketing budgets, or having to cannibalize lower funnel budget spent traditional media – although some brands do that too.
2. Ad-supported Streaming Boosts Long-Form Video. All traditional media owners (publishers, radio, and television broadcasters) are developing non-linear ad sales successfully. The most spectacular progress in 2024 came from ad-supported streaming. The penetration, usage and ad sales of both TMO-owned platform (e.g., Peacock by NBC, Joyn by ProSiebenSat.1, ITX, and TF1+), and pure-players (Netflix, Prime Video) grew dramatically in 2024. The proportion of users subscribing to an ad-supported tier grew everywhere. In the US, it grew from 5% to 17% for Netflix, from 10% to 30% for Disney+, and from 0% to 80% for Prime Video as Amazon introduced advertising as its default tier in 10+ key markets in 2024 (US, UK, France, Germany etc.). With more scale, in addition to addressability and brand safety, ad-supported streaming is increasingly attractive to brands. Many brands and agencies are thus reallocating ad budgets from linear TV – where impressions continue to erode by -5% to -10% per year across market and demographics – to the streaming offerings of their media partners. MAGNA believes it’s a zero-sum game, and cross-platform premium long-form television, which include television and long-form streaming, is more attractive overall against the competition of other media formats.
3. Artificial Intelligence. AI is organically driving the advertising markets in two ways. Directly: all Tech companies are now launching and promoting “AI-Powered” services and products to a wide audience, which increases their overall ad budgets. Indirectly: AI is being used in the ad tech ecosystem to optimize creative costs, dynamic versioning, and programmatic effectiveness, thus improving the return on investment for brands.
4. Ecommerce Competition Surge. Several new DTC brands – often coming from Asia, like Temu and Shein – are aggressively challenging traditional brands (e.g., clothing brands) and established ecommerce platforms like Amazon. This is mostly a driver for digital advertising (Search and Social formats in particular) but these brands are also using traditional media and TV campaigns.

There was one additional driver in 2024 that will not apply again in 2025: the strong improvement in the monetization of short vertical videos – that have become a dominant usage on video and social apps, since mid-2023 – which contributed to strong growth for Instagram and YouTube in 2024. We are not saying that digital monetization will deteriorate in 2025, but now that this new ad format is well established and monetized, average revenue per ad view is unlikely to increase again at a similar rate.

The economic environment is expected to remain robust in 2025. According to the IMF WEO update of October 2024, global output (real GDP growth) will remain at +3.2% i.e., the same rate as 2024 and the same rate that was expected in the April update (which was the basis of our summer forecast). The outlook is a bit brighter, however, for European markets that crawled between 0% and +1% in 2024. Germany, for instance, is expected to grow by +0.8% after stagnating in 2024, and the UK is expected to accelerate from +1.1% to +1.5%. Another good sign for marketing activity is the confirmed slowdown of consumer inflation. Lower energy costs and high interest rates successfully reduced inflation in nearly all advanced economies. From +7% to +10% in 2022-2023, consumer price inflation has now slowed to +2% to +3% in Europe and North America. The IMF is expecting CPI inflation to slow down further, to +2% or less in most mature markets, which is a positive signal for marketers and consumers. Of course, one must remain aware of two risks to this economic stability scenario: a further deterioration of geopolitical tensions that could cause another energy crisis, and a revival of trade tensions caused by a rise in tariffs.

At least three of the four organic drivers mentioned for 2024 will still move the market in 2025, although driver #4 may not be quite as strong. That is why, even without macroeconomic acceleration, MAGNA expects non-cyclical ad growth to remain in high-single digits in 2025: from +9.0% in 2024 to +7.4% in 2025. Factoring in the (lack of) major cyclical events, actual media owners’ ad revenues will grow by just +6.1%, but that should be enough to flirt with the trillion-dollar mark ($990 billion).