Digital Advertising

Digital advertising growth in 2023: back to pre-pandemic levels, or is it?

Switchboard Mar 2

The growth of digital advertising
Table of Contents

    In a new report from Research and Markets, the global digital advertising market is expected to grow from $178.29 billion in 2022 to $185.17 billion in 2023, representing a compound annual growth rate (CAGR) of 3.9%).

    By 2027, the industry is predicted to reach $209.43 billion (at a CAGR of 3.1%).

    This growth also reflects projected ad spend, where forecasts from Insider Intelligence suggest spending will increase by 10.5% globally, reaching $626.86 billion this year – following the pandemic spending boom and subsequent drop – an improvement from the 8.6% increase in 2022.

    In terms of regional trends, it’s business as usual with North America still dominating the digital advertising market in growth. The region is also expected to make up 47.41% of global ad spend (compared to 29.63% in APAC, and 17.56% in Western Europe as the biggest spenders).

    All of this growth and spending comes from somewhere, but who is driving these numbers up?

    Major players in digital advertising still hold the lion’s share

    With North America taking up the biggest share of the digital advertising market, it wouldn’t surprise most people to know the major players behind this growth and spending are Google Ads, Facebook, Amazon, Microsoft, Verizon, and Twitter (with other giants such as Alibaba, Sina, Baidu, and Tencent hailing from APAC).

    Google’s advertising revenue in particular has seen total growth of 52.78% since 2020, reaching $224.47 billion in 2022. Its main Chinese competitor, Alibaba, on the other hand, achieved a total revenue (i.e. not just from advertising) of approximately $131.2 billion.

    Leading channels for advertising

    The latest figures suggest that two-thirds of the global population currently use the internet, representing a growth rate of 6.1% over 2021. And with the growing number of self-service platforms, it’s no wonder the digital advertising market is expanding. However, not all digital channels are equal in market share.

    • Programmatic display is predicted to exceed 91% of spending in 2023 thanks to the triopoly of Google, Amazon, and Meta driving gains in channels such as CTV, social media, and retail media networks.
    • Social media was expected to achieve a year-on-year growth of 27.6% in 2022 (in North America).
    • Retail media networks were showing more bang for advertising buck with impressions up by 61% towards the end of 2022
    • Cost per click (CPC) was down 12% year-on-year.

    Combating the “real-terms” decline

    Despite these positive figures, world economies are still reeling from the pandemic and current economic challenges – both the U.S. and European markets for example are facing weak economic growth according to the World Economic Forum, with annual inflation rates sitting at 6.4% in the U.S. and 8.8% in the U.K.

    So in real terms, we’re looking at a decline of around 3% (depending on the region). This means advertisers will have to figure out ways of being more efficient with their ad spending – a large part of which requires having a solid foundation of data on which to build.

    Working with multiple digital advertising channels means masses of data come into a business from disparate streams, making it impossible to drill down into which channel or ad partner is performing the best, or to scale data operations effectively.

    To combat this real-terms decline, advertisers will need to more effectively unify disparate data to enable them to optimize ad spend across multiple campaigns, properties, and audiences in the coming years.

    If you need help unifying your first or second-party data, we can help. Contact us to learn how.

    Schedule Demo
    subscribe

    STAY UPDATED

    Subscribe to our newsletter

    Submit your email, and once a month we'll send you our best time-saving articles, videos and other resources