The US ad market, excluding political advertising, grew by 9.6 percent in the second quarter of this year, according to ad consultancy Madison and Wall’s latest US forecast, higher than had been anticipated. While there’s still talk about difficult times and tight budgets, the data shows that the US market is in a strong position. “Whether its participants realise it or not, the industry just experienced a remarkable third consecutive quarter of around 10 percent growth on an underlying basis,” the consultancy said in a release accompanying the forecast.
Strong growth is expected for the third and fourth quarters too, though not as strong as in H1 due to tougher comparables in H2. Total growth for 2024 is projected to reach 7.2 percent excluding political advertising, or 10.5 percent including it, and Madison and Wall noted that there could be unexpected upsides during the rest of the year as well.
Growth for some, not all
There are a few reasons why the industry’s mood music doesn’t necessarily chime with this data. The first, noted by Madison and Wall, is that part of the reason these growth figures are so high is that comparables during the first half of last year were relatively low. Big increases in ad spend therefore reflect the weakness of last year’s ad market as much as the strength of this year’s. That said, financial indicators in the US are strong, which creates a strong environment for advertising. While the second half of the year has much tougher comparables (last year’s growth rates in Q3 and A4 were 7.5 percent and 10.6 percent respectively), the consultancy said it can’t see any other reasons why growth should decelerate.
Another major factor, highlighted in WARC’s recent global ad spend data, is that growth is still being captured by the digital pure-play platforms.
Pure play platforms accounted for 67 percent of US ad revenue in Q2, with growth sitting at 16.4 percent. This figure is particularly significant as it excludes all digital extensions of traditional media, such as CTV, digital publishing, digital OOH, and digital audio. All these channels, as well as their analogue counterparts and other non-digital media types, competed for the remaining 33 percent of US ad revenues.
Many of these other media channels are facing significant pressures, despite the growth of the wider market.
Olympics provides a boost, GARM’s discontinuation poses a challenge
TV – including connected TV – is expected to receive a 3.7 percent boost in Q3, thanks to the Olympic Games. Outside of the Olympics, the overall trend is still one of decline – though not as steep as it has been in the past. In Q2, the total television ad market was down by one percent – a less harsh fall than the sector has seen in some recent quarters. Across the whole year, total TV advertising is forecasted to be down by 1.2 percent.
Connected TV advertising continues to grow – just not at a fast enough rate to balance out the decline of traditional linear TV advertising. And these connected TV ad revenues are split among a bigger group of participants – including streaming services that don’t operate in the traditional linear TV space like Amazon and Netflix, and services run by hardware manufacturers like Samsung and Roku. Thus the average national TV network will see a steeper fall in ad revenues than the national average.
The open web also faces significant challenges. Growth for this group – in which Madison and Wall includes digital publishers, companies likes Yahoo and MSN which don’t run walled-garden models, and relevant parts of CTV, digital audio, and digital OOH – is still positive for the time being, up 3.1 percent in Q2, with a similar growth rate predicted for the full year.
But Madison and Wall isn’t overly optimistic about the open web’s future. The range of formats available on the open web will appeal to advertisers. However concerns around made-for-advertising content, brand safety, and issues with identifying consumers will limit growth. The discontinuation of the WFA’s Global Alliance for Responsible Media (GARM), which set standards for brand safety and suitability, could see open web advertising deprioritised further by advertisers due to the increased costs of ensuring inventory quality and brand safety, according to Madison and Wall.
