Investing in reinvention: advertising’s next act

A new media landscape is emerging, one that balances efficiency and innovation

If speculation is to be believed, the future of advertising will be a better one. Campaigns will be greener, cleaner and more equitable. Personalisation will prove a boon for audiences and brands alike - and agencies will embrace, with open arms, a spate of oncoming innovations.

Musing on the possibilities is one thing, but that vision of the future isn’t so far off, says Peter Huijboom.

A former data, insights and research entrepreneur and the CEO of media international markets at advertising network Dentsu, Huijboom notes that economic and geopolitical insecurity has shaken the sector. We need look no further than the media and tech industry layoffs that made headlines earlier this year to see that, he points out. Pressing forward, the approach will be one that prioritises technology, data, sustainability, and purpose.

“The media landscape is investing in its reinvention,” says Huijboom. “There’s a climate emergency to contend with, so agencies will be backing more sustainable media. Inflationary pressures are reinvigorating ad-funded video-on-demand plans and boosting TV investments. And AI is already being tested to maximise media effectiveness.”

Excluding 2009 and 2020, which bore the brunt of the financial crisis and the Covid-19 outbreak, respectively, digital media has witnessed strong double-digit growth over the past two decades. However, this year will mark the beginning of a three-year cycle of single-digit growth for digital. These steadier gains suggest it’s reaching maturity in the marketing mix. 

“The future will tell if this is a temporary slowdown or a true inflection point toward a structurally slower growth pace for digital,” says Huijboom. 

Naturally, advertising is settling into a new rhythm. Rapid growth in retail media and connected TV (CTV) is supplementing more subdued growth across traditional digital avenues such as search, banners and video, which collectively account for a high proportion of total spend.

With that, digital is projected to experience almost consistent incremental growth over the next three years, accounting for about $3 in every $5 spent in advertising worldwide, according to the latest edition of Dentsu’s Global Ad Spend Forecasts.

As businesses pay closer attention to their bottom lines, campaigns will continue to become more ‘measurable’ in the year ahead, with retail media, CTV, and social all vying for a greater proportion of ad spend. Addressable models offer targeted advertising based on user data and preferences that let marketers assess results and adapt content in real time.

“The good thing about that is brands can deliver valuable experiences more efficiently. But advertisers must work to preserve the value exchange with audiences,” Huijboom warns. “Many consumers feel the traditional value exchange in advertising, where people enjoy free content in exchange for their attention, has been damaged through trade-offs with their privacy.”

From a macro perspective, the global outlook suggests the industry is gearing up for dynamic growth. The United States remains the world’s largest advertising market, set to reach $300.6bn in 2023. That being said, Brazil will take home the title of the fastest-growing market in the Americas, having reached relative stability following a drawn-out pandemic recovery. 

Meanwhile, in Europe, the UK emerges as both the largest advertising market at a projected $42.4bn and the fastest growing in 2023, with digital accounting for more than 70% of the country’s ad spend. 

China, Asia-Pacific’s largest advertising market, is forecast to hit $123.4bn in light of the economy’s recent reopening. The region’s most dynamic player, however, is India, which will see its third consecutive year of double-digit growth. Where smart devices and internet connectivity bumps up in the region, marketing dollars are sure to follow.

With this headway, advertising has a chance to nurture innovation. “Climate change is an important issue, and the continuous growth of ad spend highlights our role in moving society toward net zero – starting with its carbon footprint,” says Huijboom. He expects carbon management solutions to gain traction as marketers reconsider the environmental impacts of what, where and how advertising is placed.

By the same token, developments in generative AI will herald a new era in advertising, particularly for search. “Applications like ChatGPT have the potential to profoundly change how people access information online and how they interact with brands,” Huijboom continues.

“The market dynamics will not change overnight,” he adds. But the foundations for a reimagining of the sector have been laid. 

Dentsu is the advertising network designed for what’s next, helping clients predict and plan for disruptive future opportunities in the sustainable economy. Twice a year, Dentsu publish advertising expenditure forecasts, sharing the most significant trends from the data collected by investment analysts across 58 markets – and the key implications for media decision makers.

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