S4
Episode 5
Global Trends in Advertising Spend
About This Episode
Unpacking year-over-year growth in ad spend across global markets and breaking down consumer behaviour trends influencing ad spend.
Karan Saggi | Director, Client Services, StackAdapt
Samantha Allison | Director, Client Services EMEA, StackAdapt
Louise Hutley | Senior Manager, Client Services, StackAdapt
Transcript
Episode Introduction (00:00:00)
Two insights that the marketers shared: US adults spend 7% of their time on Meta, marketers spend about 19%, almost a fifth of their ad budget on that app. That’s a discrepancy of 7% time spent versus 19% of your money spent. On the flip side, audio is an underutilized channel, US adults spend 11% of their time with audio or video, marketers allocate 2% of their budget to that. That’s a disparity between 11% time spent and 2% budget spent.
How Agencies Thrive Introduction (00:00:32)
But then you think about the social landscape. The research data is hugely significant when we combine all of these different touch points, so that long term loyalty and then diving into the clicks to leads to sales, gotten to a point where it can drive better results in audience targeting, and really is what’s going to set you apart. You’re tuning in, you’re tuning in, you’re tuning in to the How Agencies Thrive podcast.
Sneha (00:00:52)
Last year in 2022, we got discussing global trends and advertising spend across EMEA, APAC and North America. This time we’re flipping the script and exploring the intriguing aspects of year on year growth and ad spend. We link where money is dwindling, which channels are seeing unexpected declines, and delve into the reasons behind these shifts. Hello, and welcome to the How Agencies Thrive podcast. I’m your host Sneha Suhas from StackAdapt. And we have three experts joining us from different regions. We have Karan from North America, Samantha from EMEA, and Louise from the APAC region. I’ll pass it to them to give an introduction of themselves and talk about their professional experience so far in areas of expertise. So let’s start with you, Sam.
Samantha (00:01:43)
Everyone, yeah, my name is Samantha. I’ve been at StackAdapt coming up on five years, which is crazy. The first two of those were in North America. So I was based out of Toronto, and then in 2021, moved over to London, and kind of helped with StackAdapt expansion into AMEA. So yeah, talking about this kind of like different regions and how things work differently in different markets is something that I feel very passionate about, and something that’s close to my heart. So really excited to be here.
Karan (00:02:14)
we have some really good questions and trends to go over in this discussion. So I’m really looking forward to it. As a reminder, I’ve been at StackAdapt for about three years now. And I’ve worked in programmatic for over six years. So it’s been it’s been quite a ride, and I’m thrilled to be a part of it. I’ll pass it on to Lou, for introduction.
Louise (00:02:40)
Thanks for having us back on the podcast, really excited to be here. My name is Louise, I currently work for StackAdapt of our Sydney office across the APAC region. I was originally from UK. So I have quite a bit of EMEA experience as well. I’m really excited to see what that landscape looks like now versus what I experienced seven years ago.
Sneha (00:03:01)
Thank you for the introduction, and so glad to have so much experience on the show. Very excited. And I’m going to start with my first question. So just looking back at the last episode, we talked about spend in the regions of EMEA, APAC and North America and where the money is going for this time. I want to flip that around a little bit to look at year on year growth and ad spend. Can you tell me where the money is dwindling? And what channels have gotten less spend than expected? And what is the reason for this?
Karan (00:03:35)
I can speak to that question for the North American market as well. This is a year where we can look at the size of the ad industry, specifically in terms of ad spend as glass half empty or glass half full. Because there is year over year growth and ad spend overall and growth will continue for years. So the market is not slowing down in any sense. Forbes cited an estimation that global ad revenue will grow to over 833 billion this year. That’s a billion with a B and as of April, we’ve hit a quarter of that mark already in the US alone. If you want to look at the glass as half for we look at display and CTV formats as they continue to grow at a healthy pace. For example, if you look at the last five years since 2019, days before the pandemic CTV in the US has seen a steady growth compounding year over year back in 2019. CTV was about 6 billion going up to the year 2023. It’s forecasted to be near 29 billion. That’s a jump from six to 29 billion. That’s a five fold increase. On the flip side, seeing why the glass half empty in 2023 came with economic uncertainty, there were layoffs across the board, at least in the first half of the year. As of this year, we’re inching closer and closer to cookied application which is coming in 2024. As of now And then we’re also dealing with applications of artificial intelligence and machine learning. And on the flip side, we’re moving further or further away from lock downs of COVID. So there’s enough turbulence to shake things up. One channel where the money is slowing down is video. Again, monetary growth. In this video, if you look at dollar for dollar, it is growing, however, the percentage growth year over year has slowed down. So looking at that year over year growth from 2022, to 23, to 2024, and 2025. We’re going from 17% year-over-year growth to 16% to 15% to 14% by 2025. So there is a visible decline there.
Louise (00:05:42)
I’m representing a pack and a pack is projected to see 4.4% growth this year compared to 1.9 and 2.9%, in EMEA and the Americas respectively, so we’re actually still experiencing a really strong locket over here. And this is also the prediction of Magna who suggested growth and APAC will be led by India at 12%. And Pakistan by 11% is absolutely huge. Saying this, we have definitely seen growth. So the total advertising expenditure increasing at around 9.1% versus 36%. That was reported in 2021. And TV spending continues to decline as media formats continue to shift to digital. By 2027 Magnet predicts linear TV budgets will represent just 12% of total advertising budgets here in APAC, which is a big change compared to recent years. In addition to TV, and in the last episode, we talked a bit about untapped opportunities and gaming continues to be one of them in this market. According to a recent study by the IAB in Australia and New Zealand, while experimentation increased, only 18% regularly considered it as a part of regular activity, versus 25% that was reported in 2022. And the outlook for the next 12 months is a little bit more positive, with 72% intending to increase activity, and some of the reasons contributing to slightly lower than expected adoption rates or brand safety concerns, measurement limitations and audience suitability.
Samantha (00:07:09)
Yeah, I mean, those are some tough answers to follow. I think, you know, Luke kind of already touched on what that growth percentage looks like for me as well into 2023 and 2024. So yeah, I think for what we’re seeing, just to kind of flip it back for a second, I think we’re seeing very similar patterns across EMEA. Everything that Karen had touched on, you know, is things that we’re taking into consideration as well. Same with Lou. I think with EMEA right now we’re in a place where channels like CTV, are gaining more popularity and familiarity with the region. Also something worth noting that according to Insider Intelligence, CTV as a channel has grown globally by over 13%, which is massive, I guess on that same positive note, before we get into kind of the decrease of your question is 87% of CTV inventory will be transacted programmatically in 2023. So I think that is fantastic for that channel, and fantastic for this region. Because I do think, and those numbers, just to clarify, were globally and not specific to EMEA but I still think obviously has a major impact on a region like EMEA, and wonderful because like I said, in the previous episode that we did, EMEA was slow, more slow to adopt CTV and didn’t really have as much of an appetite. So to see that shift this year, and to continue on into 2024 and beyond, has been a really, really positive thing. Now, contrary to that, echoing what Karan said, we have noticed, and it is noticeable by the stats that Karen had just presented to us. That video is slightly steadying, you know, I want to be careful on the fact that yes, it has decreased statistically. But I think when you think of programmatic as a whole and the kind of channels that we run at StackAdapt, I don’t necessarily think it is slowed down tremendously. I think it just really depends on the overall strategy. And taking into consideration these emerging channels, like CTV, are in some cases digital as long as well.
Sneha (00:09:20)
Moving on to the next question, I want to ask about consumer behaviour in your particular region. What is dictating ad spend from advertisers? And are there any unexpected trends or surprises in the span patterns?
Karan (00:09:36)
This is an interesting one, because how audiences and consumers engage with certain ad formats, devices, or placements that does evolve over time, such as the nature of technology. And you’d think as marketers and planners we adapt to that. One strategy to hold an effective ROI consistently on your spend is to pay attention to this evolution and audiences consume numbers and how they engage with these different things. One question we can ask ourselves of consumer behavior is where do audiences spend most of their time and their attention? Because as marketers, we want more of that attention for ourselves and our brands. So for an example, let’s compare percent of the time you spend online, or the audience spends online versus the percent of ad spend that we spend towards those specific platforms. Of course, this is not an apples to apples comparison. But if you look at percent for percent, there are some interesting insights that come about, because at the very least, for upper funnel tactics and prospecting, you as a marketer, you as a brand, you want to be aware that net new target consumers. Two insights that e-marketer shared, that I can put forth here first, Meta, the owner of Facebook and Instagram gets far more ad spend than audiences spend time on it daily. US adults spend 7% of their time on Meta, and yet, marketers spend about 19%, that’s almost a fifth of their ad budget on Meta. So that’s a discrepancy of 7% time spent versus 19% of your money spent. On the flip side, audio is an underutilized channel. US adults spend 11% of their time with audio or radio. And yet marketers allocate 2% of their budget to that. That’s the disparity between 11% time spent and 2% budget spent. So that said, this study may vary for region to region, the stats I shared were for North America, for global agencies or brands, this is a point of differentiation to look into.
Louise (00:11:45)
Yeah, I tend to agree with Karan, on this one. I think it’s inevitable as marketers, we are always trying to reach our consumers with relevant valuable messaging wherever you are. So it makes sense that the money is following the consumer. And this can differ quite a bit across APAC markets. And I’m sure globally, as an example of this in Japan, we actually continue to see strong growth in digital driven by search and video content. TV continues to have overwhelming reach and is effective in raising awareness. And it remains popular for live sports ,news dramas and a variety of programs and following a forecast of a 2.4% decline in 2023 TV advertising spend, it’s actually expected to grow 1.4% in 2024. This is also proven to be the case in Australia with SMI reporting that the Matilda’s performance and the recent FIFA World Cup or Women’s World Cup resulted in huge growth in TV streaming ad spend and a win both for advertising and for women’s sport. This says not all formats or contexts are equal or suitable for all messages. And whilst brands should follow the audience’s attention to be seen and cut through, they should also consider consumer mindset in these content environments and ensure that message continues to add value to that consumer. For this reason, we continue to see spend follow safer or more tested platforms rather than emerging channels such as in-game.
Samantha (00:13:13)
Yeah, I mean, I totally agree with both Karen and Lou I think, you know, that is across the board. And I think when it comes to consumer behaviour and stuff, that’s definitely always at the forefront in terms of how we, you know, reach those people. I think just building on Lou’s kind of sport, call out: One thing in EMEA, specifically, that is really going to impact that kind of consumer behaviour—this is looking a little bit into 2024, mind you—but there is the Euro World Champion and the World Cup in terms of football. So I think that is really going to drive kind of like consumer behaviour and the types of messaging and kind of just general interest, I guess, in that region. So I think that’s definitely a big one to look out for. Kind of pivoting a little bit. I think one thing that we’ve been talking about a ton in EMEA, and across the board for sure, is just how evident it is that digital out-of-home, and eVOD, and streaming services, and streaming platforms, and digital ad spend are on the rise or, you know, expected to increase, which bodes well with, you know, the ever-changing landscape. And then how do you tailor that message to the consumer, right? And how do you make sure that you’re always following them in this ever-changing landscape? And although there is need for more caution and consideration when, you know, looking at these new kind of emerging channels and what have you, I think this positive trend really does indicate promising opportunities for advertisers looking to reap the benefits of a multi-channel strategy. And to make the most of this opportunity, brands should be really prioritizing efficiency. By leveraging tools, such as AI, and optimizing their campaigns for better ROIs, of course, and striking that right balance between cost and engagement is really, really key. And I think something that obviously StackAdapt always has at the forefront. And then I think we will continue that, of course into 2024 and beyond.
Sneha (00:15:20)
What’s a new and exciting topic in digital in your region that you can share with us?
Karan (00:15:26)
There have been predictions and decisions that have yet to take effect, say with cookie deprecation when that kicks in and 2024 as planned, will our solutions hold and evolve outside of what is known and what we’ve prepared for another emerging trend to keep an eye on is the use of artificial intelligence. It’s been in use for a while, but it’s really proving to be a Swiss Army knife of when it comes to how to use it and where it can be applied. For agencies, for example, it could be an efficient way to save expenses for brands, it could be an intelligent way to automate things, saying creative testing, optimizations, things like that. As a group talking about what’s next and what’s coming, we tend to have a bandwagon effect, and we tend to look where the next shiny thing is. What is worth keeping an eye on is for me is regulation and measures around the use of AI. I can share two examples with you first, a study by DS Cujo called HI over AI said that more than half of the US adults trusted human-generated content more than AI-generated content, where your subset of consumers skew in that scale is worth looking into and worth being aware of. The second example I can share as a brand is keeping an eye on copyright laws for AI. US court in Washington ruled that a work of art created by AI without any human input cannot be copyrighted. So as a brand or creative agency, you may want to be aware of that and see how that limits your use or application of AI.
Louise (00:17:06)
Yeah, I’d say with it, say the similar thing in this market. Also, as Karan mentioned, the adoption of AI is accelerating. And this is hugely exciting for our markets for our consumers, and for the kind of broader digital media industry more broadly. But we are starting to tackle new issues around copyright on the data used to power these tools, and issues around ownership. So there’s definitely a lot of growth and learning that we need to do in this area, like tools like Mid-Journey and ChatGPT have huge potential, but only now we’re just beginning to uncover the value that they bring to our roles and how to really combine these with human thinking, to retain competitive advantages, I think, above and beyond this, like similar to the US and likely to AMEA, we’re still having big conversations around topics that we’ve talked about for a couple of years now, these being privacy, attention and measurement. And we’re starting to see many brands, particularly global brands, pay more and more attention to corporate responsibility, in addition to this, which includes not only carbon emissions and sustainability, but also tackles issues around diversity and ethics.
Samantha (00:18:14)
Yeah, so I think definitely AI, ChatGPT and GDPR. And how all of those are going to work together. And you know, withholds the privacy and protection that is so you know, deeply ingrained. And kind of like AMEA advertising. And what that looks like, I think is definitely a conversation that is consistently always happening. And you know, the conversations always moving as things evolve and stuff like that. So I think that would be a really big hot topic here for sure.
Sneha (00:18:48)
Amazing, thank you. Let’s look at projections 2025. A little before that maybe and a little beyond that. So what can we expect will trend and what will slow down?
Louise (00:19:00)
We’ve already touched on this already. But driving efficiency through AI and automation will likely be on a lot of CMO’s minds as we plan for 2024 and beyond. Open AI’s ChatGPT has been in the news lately as a powerful machine learning tool that’s challenging people’s understanding on what AI might be able to offer, there’s a good chance that that support chat rep that you’re already talking to, is actually already a machine and that the hype that has surrounded these platforms over the last six months has already challenged companies to find ways to work smarter and not harder. This in turn enables humans to focus their time on ideas and thinking that differentiates their company, agency or brand. There is still also a huge amount of growth remaining within digital and APAC in particular the adoption of digital out-of-home, in-game, and audio, and CTV as mentioned earlier in in regards to the EMEA market, but it’s going from strength to strength here in APAC also. There has never been so much choice for consumers and then we continue to see On Demand platforms such as Foxtails binge and in this market trial ad-supported subscription tiers to diversify their income streams. As for digital out-of-home, improvements in workflow alongside increased inventory and data access will help drive adoption of this channel. Finding ways to measure and attribute value to all stages of the purchase process will become even more important as we move towards a company’s future and adopting a multi- channel approach that values upper funnel tactics will be key to drive long-term brand consideration and growth.
Karan (00:20:31)
We touched on this earlier for North America as well in terms of ad spend expect growth and dollar volume of the industry. However, some channels like video may have a slower pace looking at percent year over year. What’s interesting, is looking at the future projections by vertical, the largest ad spenders are retail and CPG for this year, and that’s not a surprise, they will continue to dominate for the next two years at least, eMarketer forecasts and both to grow the most. Retail will grow 14% from this year to the next, and CPG will grow 13%. So both have over 10% growth year over year in ad spend, which is massive. On the bottom of that list, if you rank all verticals, there’s telecom growing at only 5%. But again, that could be linked to how we measure return on ad spend. With that vertical and where marketers see most value being brought back. To give you an idea of scale, retail is projected to get 84 billion and spend as the top spending vertical. And Telecom, which is the bottom of the list is projected at 17 billion, which is the lowest spending vertical for the next year.
Sneha (00:21:42)
That’s amazing. And this brings us to the end of this episode. Karen, Lou, Samantha, thank you so much for joining us from different regions. It was really exciting to have you and to you the one who’s listening to this who stayed back till the very end. Thank you so much for hanging back. And if you found this podcast useful, you can share it as a resource on your Work Chat. Tell your teammates, your colleagues about it. And make sure you subscribe, you follow the podcast to catch the episode right when it drops. We have episodes releasing every alternate Wednesday. If you want to reach us, you can write to us at stackadapt.com. That is academy@stackadapt.com. For now, this has been the How Agencies Thrive podcast. Thank you so much.
Episode Outro (00:22:30)
Thank you so much for tuning in. This has been the How Agencies Thrive podcast. If you like what you heard, then there’s three things that you can do to support the show. Number one, subscribe. Number two, leave us a review. And number three, share our podcasts on social media or with anyone who might find value in this content. If you have questions or feedback or just want to learn how agencies and brands work with StackAdapt, you can us at StackAapt.com. Thanks for listening, and we’ll see you next time
