GroupM_TYNY_Adex_forecast

2023 Global
Mid-Year Forecast
JUNE 2023
A Report From GroupM, WPP’s Media Investment Group

2
INTRODUCTION
GLOBAL ADVERTISING
GROWTH
CHANNEL UPDATES
TOP 10 MARKET DATA
03
05
06
12
Television
Audio
Digital
Print
06
08
09
10
11 Out-Of-Home
CONCLUSION
50
MEDIA TRENDS FRAMEWORK
Political, Legal, Regulatory
TACTICAL
STRATEGIC
EMERGING OPPORTUNITIES
Economic
TACTICAL
STRATEGIC
Social Cultural
TACTICAL
STRATEGIC
Technological
TACTICAL
STRATEGIC
15
16
27
37
43
GLOBAL SUMMARY
DATA TABLE
51
JUNE 2023 • T H I S Y E A R N E X T Y E A R I G L O B A L M I D - Y E A R F O R E C A S T

INTRODUCTION
3
The economic mood
around much of the
world seems to be
one of impending
trouble…
although central bank representatives and company CEOs are
all quick to point out the surrounding uncertainty of the timing.
There’s not a tidy way to express this in English, but the Inupiat
or Inuit word qaquablaabnaqtuq — to be tense because of an
impending unpleasantness — feels close. Halfway through 2023,
the world is still experiencing what the Danish might call
tilpasningsvanskeligheder, or adjustment difficulties. The
worst of the pandemic is behind us, but the behavioral changes
it wrought and the flows of capital it impacted are still working
their ways through the global economy. This includes the decline
in government spending on public health messaging and
consumer stimulus payments, for example, or the added difficulty
in securing private investment as interest rates climbed to combat
the inflation driven by the pandemic recovery.
However, as we look ahead in 2023, we should expect a return
to lapping more “normalcy” in terms of advertising revenue
growth. Our estimate for 2023 growth remains unchanged from
our December forecast — 5.9% (positive in nominal terms, but
negative after adjusting for inflation). The automotive sector is
expected to once again have inventory to promote, and the
purchase en masse of new computers and TVs at the start of the
pandemic will reach the beginning of expected upgrade cycles as
the year ends. Of course, there are large consequential events that
prevent any true normalcy; the war continues in Ukraine, and the
application of artificial intelligence (AI) to absolutely everything
means each day brings something new.
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2
Connected TV (CTV) adoption, among consumers and
advertisers, is growing rapidly, adding 10.4% in ad revenue
between 2023 and 2028 on a compound annual basis.
Consumer spending on subscription video on demand
(SVOD) represents between just one-fifth and one-third
of total video spending in major markets, leaving plenty
of room for streaming providers to grow subscriptions.
Regulation tied to data privacy, national security,
competition and freedom of speech is impacting
big technology and advertising platforms, although
this is more likely to result in share shifts rather
than industry decline.
1
Retail media is the third-fastest growing advertising channel
in 2023 (behind digital OOH and CTV, although those
channels are a fraction of the size). Retail media, which we
now define as including ad revenue from last mile delivery
services, will grow 9.9% to reach $125.7 billion in 2023, and
is forecast to exceed TV revenue (including CTV) in 2028.
3
In this state of constant apprehension and wonder, we expect
global advertising revenue to grow 5.9%, consistent with our
prediction in December 2022. Global advertising in 2023 will total
$874.5 billion, excluding U.S. political advertising. The key drivers
of advertising growth are discussed in detail on the following
pages, notably:
The fact that our
forecast remained
remarkably
consistent from
December 2022 to
June 2023, despite
macroeconomic
impacts from
inflation and
interest rates, is in
part a testament
to the increasing
maturity of the
digital channel
and its largest
representatives.
Digital pureplay
ad revenue will
account for 68.8%
of the total in 2023
and is expected to
see single-digit
growth over the
next five years.
4
AI is likely to inform, or touch in some way, at least half of
all advertising revenue by the end of 2023. It has long been
used extensively across media optimization and, with new
tools being developed by platforms and agencies, as well as
the rapid development and deployment of generative AI
technology, will disrupt more elements of advertising and
media. It is incumbent on all of us to use it conscientiously
and with appropriate safety measures in place.
5
The importance of new business growth and competition remain
integral to forecasting advertising growth. It is the deceleration
(and in some cases decline) of advertising spend among digital
economy businesses and start-ups that played a key role in 2022's
advertising slow down, and it is the new AI-focused businesses
being formed now that will likely drive ad growth in several years’
time as they look to grow their customers and revenue.
4
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While our forecast for 2023 growth remains constant, there have
been shifts within individual markets. China is now expected to
grow ad revenue 7.9% in 2023, up from the 6.3% we forecast in
our December 2022 report. The U.S. estimate remains nearly
unchanged at 5.1% in 2023 (versus 5.5% in the December forecast),
although this is off a slightly weaker comparable as we downgraded
growth in 2022 from 7.1% to 5.7% after analyzing year-end results
for media owners.
The macroeconomic environment has led some markets to trim
expectations for 2023 as compared to our December forecast,
including India (from 16.8% to 12.0%), Australia (from 3.4% to
0.2%), Canada (from 8.0% to 5.0%), France (6.3% to 4.2%),
Indonesia (from 9.7% to 6.7%) and Hungary (from 8.0% to 1.0%).
Three markets, Singapore, Kenya and Sweden, are now predicting
decline in 2023 instead of the growth forecast last December.
On the flip side, there are markets that have raised expectations
from December, notably Brazil (from 3.8% to 6.6%), Malaysia
(from 5.9% to 7.4%), Hong Kong (from 5.0% to 6.3%), Middle East
and North Africa (MENA) (from 4.2% to 6.2%), Nigeria (from 21.4%
to 31.2%), the Philippines (from 11.5% to 17.3%) and Poland (from
0.5% to 5.5%). Of the four markets that forecast decline in
December, three are now projecting growth: Italy, Spain and
Austria. Only one, New Zealand, remains in decline.
2023
global
advertising
growth
5.9%
GLOBAL ADVERTISING
GROWTH
Latin America
Middle East and
North Africa
Global
Europe &
Central Asia
North America
Asia Pacific
Source: GroupM
GLOBAL & REGIONAL AD GROWTH
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Digital ad revenue in 2023
will account for 68.8% of
total revenue at $598.5
billion dollars. There has
been a marked deceleration
in growth from the 32.0%
recorded in 2021, with 2022
coming in at 9.2% and 8.4%
expected in 2023 (in line
with our December 2022
predictions). These high
single-digit growth figures
are the slowest since 2009
during the great financial
crisis, when digital growth
notched just 3.6%. However,
the deceleration should be
thought of more as a
function of the size and
maturity of “digital” rather
than a recessionary
environment (the IMF
forecast from April 2023 put
global GDP growth at 2.8%
in 2023). With digital now
more than two-thirds of total
advertising, digital growth
at historic double-digit
rates has become difficult
to achieve, and we expect
digital to decelerate further
over the next five years.
6
Source: GroupM analysis of company filings.
Note: 2022 revenue represents constant currency growth
Retail media proves an exception, with growth of 9.9% forecast for
2023, bringing its total to $125.7 billion and representing 14.4%
of total advertising. Growth is somewhat skewed by China and
the U.S., the largest and most mature markets. Excluding those
markets, growth climbs to 15.1% in 2023. It is important to note
that we have revised our definition of retail media to include
revenue from last mile delivery providers as that group has
expanded beyond restaurant delivery to delivery of groceries and
other goods. We have revised our historical figures accordingly.
In digital, and broadly across total advertising, concentration
continues to increase, albeit more slowly. The top 25 sellers of
advertising globally (17 of which are primarily digital) accounted
for 75.3% of total advertising revenue on a constant currency basis,
up from their 74.0% share in 2021 (70.7% on an ex-China basis).
Digital
CHANNEL UPDATES
LARGEST GLOBAL MEDIA OWNERS
Advertising Revenue in bn $USD 2016 2017 2018 2019 2020 2021 2022
Google 72.9 87.4 106.3 122.3 131.9 192.0 213.1
Facebook 27.9 41.4 57.0 71.5 86.0 114.9 119.5
Bytedance 0.8 2.3 7.3 16.5 30.0 38.6 46.6
Amazon 4.2 6.3 9.1 12.6 19.8 31.2 38.3
Alibaba 9.5 15.1 18.3 22.9 28.6 31.5 31.3
Microsoft (PF) 7.5 9.0 10.3 11.6 11.3 15.3 19.1
Comcast (PF) 13.5 13.8 15.9 13.9 12.8 15.6 15.9
Pinduoduo 0.0 0.2 1.7 3.9 7.4 11.5 13.9
Disney (PF) 11.8 11.5 12.0 11.9 11.2 12.5 12.8
Tencent 3.9 6.2 8.4 9.9 12.6 14.0 12.4
Baidu 8.8 10.7 11.9 11.3 11.2 12.7 11.2
Paramount 11.9 10.6 10.9 11.1 9.8 11.4 11.1
Warner Bros. Discovery (PF) 10.1 10.4 10.7 10.6 9.5 10.6 10.2
JD.Com 2.1 3.1 3.9 4.9 6.6 9.1 9.2
Kuaishou 0.0 0.1 0.2 1.1 3.3 6.6 7.4
Fox (PF) 5.2 5.5 4.9 5.1 5.5 5.7 6.1
Yahoo! 7.2 6.5 5.8 5.6 5.0 5.5 5.6
Snap 0.4 0.8 1.2 1.7 2.5 4.1 4.7
Apple 0.1 0.3 0.5 1.1 1.5 4.0 4.7
Meituan 0.4 0.7 1.4 2.3 2.9 4.6 4.6
Z Holdings (PF) 2.5 2.8 3.2 3.4 3.7 4.2 4.5
Twitter 2.2 2.1 2.6 3.0 3.2 4.5 4.0
RTL 4.1 4.2 4.2 4.2 3.8 4.3 3.9
IHeart Media (PF) 3.1 3.1 3.4 3.5 2.8 3.4 3.7
JCDecaux 3.9 4.0 4.1 4.4 2.6 3.1 3.5
2022's Top 25 Total 214.0 258.1 315.2 370.3 425.5 570.9 617.3
Total Industry 485.3 522.8 570.7 628.1 618.6 771.7 820.0
2022's Top 25 Total Share of Industry 44.1% 49.4% 55.2% 59.0% 68.8% 74.0% 75.3%
Ex-China-Based Companies 188.5 219.7 262.1 297.5 322.9 442.3 480.7
Total Industry Ex-China 423.2 448.9 479.2 516.1 500.8 631.4 680.4
2021's Top 25 Total Share of
Industry Ex-China
44.5% 48.9% 54.7% 57.6% 64.5% 70.0% 70.7%
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As data privacy concerns
worldwide and eventual third-party
cookie deprecation continue… we
expect logged-in environments to
continue to appeal to advertisers
looking to maximize addressability
and performance.
7
New digital players, however, continue to emerge and are perhaps
more likely than in previous years to grow and take share given the
current regulatory environment that has proven especially challenging
for large established tech companies (see more on page 26). In
some cases, the emerging players would make for unlikely acquisition
targets anyway — Apple appears on this list for the first time with
an assumed $4.7 billion in (constant currency) advertising revenue.
While the company does not disclose advertising, we have made
estimates as to its size within the reported services revenue. Walmart
only just missed inclusion in the 2022 list and will almost certainly
be present in 2023 as its 2022 advertising revenue hit $2.7 billion
dollars, and its first quarter earnings call noted advertising growth
of 30% globally (Flipkart ads were up over 50% the company said).
Apple and Walmart, along with other emerging players like Uber,
all benefit currently from first-party data and targeting abilities.
As data privacy concerns worldwide and eventual third-party cookie
deprecation continue to inform media and partner allocations over
the near term, we expect logged-in environments to continue to appeal
to advertisers looking to maximize addressability and performance.
For commerce and retail media platforms especially, shopper data is
being applied increasingly in connection with video content, whether
on-site or off. In China, Douyin (the short-form video platform owned
by TikTok parent ByteDance) partners with Alibaba’s food delivery
app ele.me, and in the U.S., a campaign with Walmart may run not
just on-site or in-store, but also on Paramount-owned PlutoTV,
for example.
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Globally, linear TV audiences continue to decline, especially across pay TV providers. Viewership is shifting to
connected TV (CTV), which we define as any digital, professionally produced video including FAST and AVOD,
but excluding YouTube. In some of the largest linear TV markets, the declines are clear with expected five-year
compound annual growth rates (CAGR) from 2023 to 2028 of 4.1% in the U.S., 2.8% in the U.K and 2.0%
in China. Japan, the second largest TV market, is forecast to remain flat through 2028. Brazil and India, the
number three and four linear TV markets, respectively, are still estimating growth, but at slower rates than
that if the total advertising market.
In 2023, global traditional TV revenue is forecast to be $133.6 billion (excluding U.S. political advertising), a
decline of 1.2% from 2022. By comparison, CTV revenue in 2023 is estimated at $25.9 billion, an increase of
13.2% over 2022 revenue of $22.9 billion. The global CAGR for CTV through 2028 currently stands at 10.4%
with expected revenue of $42.5 billion in 2028.
At the far end of the spectrum in the shift to digital extensions of television sits China where much of the CTV
content is from iQIYI, Tencent Video, Youku and Mango TV and, in many cases, drama and variety programs
are aired first online before moving to TV. Other markets that have been slower in terms of CTV adoption and
revenue growth are seeing the tide turn.
Television
CHANNEL UPDATES
In the U.S., the writers’ strike continues
into its fifth week (as of the time of
writing), although most studios
signaled to investors that the impact
could be limited for a strike lasting
fewer than six months. With the
expanded global audiences of streamers
like Disney+, Netflix and Amazon
Prime, content production takes place
across various international markets
mostly unimpacted by the strike, and
films already “in the can” will further
isolate immediate impacts beyond late
night programs and some of the fall
line-up of scripted programs.
In France, several consecutive
quarters of negative revenue for
linear TV providers has not been fully
offset by CTV growth, and linear TV
growth is expected to return to
declines each year from 2025 to
2028. The 4.0% growth of linear TV in
2024 is a function of France hosting
the Olympics in Paris that year — our
observation is that the Olympics
lead to incremental revenue for the
host market as well as the media
rights holders, but do not lead
to incremental industry revenue
on a four-year cyclical basis.
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9
$9.9BILLION
36.5%
2028 DIGITAL
SHARE OF AUDIO
SIZE OF DIGITAL AUDIO
IN 2028
Audio
CHANNEL UPDATES
Global audio (including digital extensions) is forecast to decline 0.3% in 2023 and remain roughly flat over the
next five years. We do not expect audio to regain pre-pandemic revenue despite the continued growth of digital
audio, which is estimated to increase revenue 10.9% in 2023, reaching $9.9 billion in 2028 (a five-year CAGR
of 6.9%). There are pockets of growth for terrestrial audio, namely in Latin America and Africa. Audio growth in
Kenya and Nigeria correlates closely with election cycles in those markets, leading to increases of 42.7% in 2022
and 20.9% in 2023, respectively. (See page 17 for more on political advertising revenue).
Digital extensions of audio, including digital formats at
traditional radio stations and digital platforms such as
Spotify, continue to increase their share of revenue. We
expect digital to represent 36.5% of total audio by 2028.
Innovation of format as well as content and technology
will mark the ensuing years as media owners work out how
to capitalize on the IP of lower-margin podcasts while also
incorporating generative AI into their businesses. There
are implications for the use of generative AI “hosts” or
DJs, as trialed at Spotify, as well as questions of music
copyright and the ability for generative AI to create music
in the style of other artists without their permission, or
compensation, as in the case of “Heart on My Sleeve,” a
song created by AI that mimicked Drake and The Weeknd
and went viral before being taken down.
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Print, including both newspapers and magazines, continues its decline, despite the growth
of digital extensions, which will make up half of total print revenue in 2028. In 2022, print
declined 2.9% versus 2021 (when there was uncharacteristic growth) and 2023 is forecast
to decline a further 4.8%. Magazines are experiencing steeper declines; they represent just
over a third of total print revenue. In terms of print’s share of total advertising revenue, the
2023 figure stands at 5.7% when including digital extensions. That is expected to fall to just
3.7% in 2028.
1 International Forest Products Transport Association
Print
CHANNEL UPDATES
2028
3.7%
2023
5.7%
total share of
advertising revenue
Germany remains the second-largest newspaper market behind the U.S., and German
newspapers are expected to see 13.4% of total advertising revenue in 2023, more than
double the global average. However, even in Germany that share is expected to fall to
9.2% in 2028. Norway, Sweden and Finland (where paper and pulp products accounted
for 13% of exports in 2021),1 also have relatively high shares of newspaper advertising,
as do several Asian markets including Hong Kong, India and Singapore.
Magazines remain an important channel for luxury advertisers, but even the strength of
that category in 2022 — advertising spend for a composite of six luxury companies
increased 37.7% in the fiscal year — wasn’t sufficient to offset systemic declines. Magazines
declined by 5.1% in 2022, slightly more than the 4.4% we had forecast in December 2022.
In 2023, as the economic outlook remains cloudy and despite the recovery of China, a major
luxury market, we estimate magazine ad revenue will decline a further 7.0% (inclusive of
digital extensions), before leveling off to low single-digit declines through 2028.
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Out-of-Home
CHANNEL UPDATES
Employed increasingly for both national and local briefs, OOH remains a key channel for luxury, restaurants and
other local services, as well as political campaigns. In Turkey’s 2023 election, political demand for OOH inventory
will mean that advertiser budgets will be concentrated in the second half of the year. The ongoing transition to
DOOH is a factor driving growth worldwide, although there are challenges in specific markets. In Chile, a new law
will prohibit OOH video, while in France, regulations may force DOOH providers to limit inventory and/or limit
lighting at night to reduce energy consumption and light pollution. South Africa, too, faces issues related to power
consumption. The country’s load-shedding (near daily widespread electricity blackouts) has media owners looking
for alternative power sources and advertisers are advised to closely monitor impressions and delivery.
DOOH will represent
37.2% of total OOH in
2023, a figure
that will grow to
43.0%in 2028.
The global out-of-home (OOH) channel has succeeded in surpassing 2019 revenue levels one year earlier than we
had predicted in our December 2022 forecast (albeit by a scant $11.8 million). Growth in 2023 (including both
traditional and digital OOH) is forecast at 12.7% helped by a rebound in China, which will add 39.7% in 2023 after
declining 40.4% in 2022. On an ex-China basis, global OOH growth is estimated to be 7.5% in 2023. We expect
growth to continue through 2028.
Digital OOH, taken separately, is forecast to grow 26.1% in 2023 to $13.3 billion. This represents a five-year CAGR
of just 5.0% as declines globally in 2020 and within China in 2022 impacted the channel. The expected CAGR for
2023 to 2028 is 9.4% on a global basis. Growth of traditional OOH will also be positive, with a five-year CAGR of
4.3% through 2028. However, revenue for traditional OOH will not recover above 2019 levels until 2025. DOOH
will represent 37.2% of total OOH in 2023, with that figure growing to 43.0% in 2028.
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12
Top 10
markets
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2023 by
the numbers
Source: GroupM
5.0%
Growth
5.1%
Growth
6.6%
Growth
4.8%
Growth
4.2%
Growth
6.0%
Growth
12.0%
Growth
7.9%
Growth
4.8%
Growth
0.2%
Growth
2023 Ad Revenue..... $325.3 B
2023 Growth……..………. 5.1%
2024 Growth…..…….…… 5.0%
U.S.
1
China
2023 Ad Revenue..... $150.6 B
2023 Growth……..…….… 7.9%
2024 Growth…..…….…… 6.4%
2
Japan
2023 Ad Revenue....... $52.6 B
2023 Growth……..………. 4.8%
2024 Growth…..…….…… 3.2%
3
13
India
2023 Ad Revenue....... $17.3 B
2023 Growth……..………. 12.0%
2024 Growth…..…….…… 13.6%
9
Canada
2023 Ad Revenue....... $19.7 B
2023 Growth……..………. 5.0%
2024 Growth…..…….…… 8.1%
7
2023 Ad Revenue....... $14.0 B
2023 Growth……..………. 0.2%
2024 Growth…..…….…… 0.7%
Australia
10
2023 Ad Revenue....... $19.2 B
2023 Growth……..……… 6.6%
2024 Growth…..…….…… 5.2%
Brazil
8
France
2023 Ad Revenue....... $26.9 B
2023 Growth……..………. 4.2%
2024 Growth…..…….…… 9.7%
6
Germany
2023 Ad Revenue....... $36.1 B
2023 Growth……..………. 6.0%
2024 Growth…..…….…… 5.0%
5
2023 Ad Revenue...... $49.4 B
2023 Growth……..………. 4.8%
2024 Growth…..…….…… 5.3%
U.K.
4
Note: U.S data excludes political spending

Of note is the growth of digital in Brazil for which we see evidence in Meta’s
annual financial filings. Brazil climbed from the sixth-largest market in
Meta’s 2021 10-K (following the U.S., “Western Europe,” China, Canada and
Australia) to the fourth in 2022 (after just the U.S., “Western Europe” and
China). We have made the assumption that these markets or regions are
provided in order of size as a matter of convention, and because the
rankings shift each year beyond the top three to four positions. If our
assumption is correct, it means that Meta saw more revenue from Brazil
than Canada in 2022 (as allocated by advertiser billing address). We can
work out that Meta revenue in Canada totaled $3.5 billion dollars in 2022
(because Meta discloses both U.S. and North American revenue), and we
can therefore reasonably assume that Meta’s Brazil revenue surpassed
$3.5 billion dollars in 2022, a significant increase from the prior year.
14
META TOP MARKETS BY CUSTOMER BILLING ADDRESS
Source: GroupM analysis of company filings
We can therefore reasonably assume that Meta’s
Brazil revenue surpassed $3.5 billion dollars in 2022,
a significant increase from the prior year.”

Advertising, a partial or primary revenue stream for four of the
five largest public companies, by market cap, is a central pillar
in conversations spanning technology, culture, government and
the economy. To help make sense of all the ways in which these
external factors will impact advertising over the coming months
and years, we’ve developed a framework modeled on a PEST
analysis. Here's everything you need to know, and more, about
the future of media and advertising.
15
Media trends
framework
Political
Legal
Regulatory Economic
Social
Cultural Technological
• TikTok Bans
• Political Ads
• Misinformation
TACTICAL
6-12 months
EMERGING
OPPORTUNITIES
2-5 years
• Digital News
• Data Privacy
• Section 230
• AI & Copyright
• Geopolitics
• Antitrust
• Inflation
• Interest Rates
• New Business
Formations
• E-Commerce
• Content Spend
• Industry Maturity
• New start-up
boom
• Consumer
Video Spend
• Sports
• UGC vs.
Professional
Content
• Emerging
Middle Class
• So long, Boomer
• AI Applications
• Search
• Transparency,
Trust & Intent
• Augmentation
• Personalization
at Scale
• Dynamic Insertion
• Retail Revolution
STRATEGIC
12-24 months
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16
POTENTIAL TIKTOK BANS
We estimate less
than a quarter
of ByteDance’s
total revenue
comes from
international
markets
via TikTok.”
Political,
Legal,
Regulatory:
TACTICAL
The geopolitical landscape is being tested and corporations are caught in the middle as the U.S. and China seek
to limit perceived threats to their international influence and domestic security. China has had long-standing bans
of digital publishers including Google, Meta and Twitter. Now the fear that international companies could disrupt,
damage and/or diminish U.S. social discourse or use sensitive data collected on American citizens, has raised the
possibility that TikTok (and possibly other platforms owned by foreign corporations) will be banned across the U.S.
There are already bans in place for government and military devices as well as individual college campuses, and in
May of 2023 the governor for the state of Montana signed a bill banning TikTok in the state. TikTok, as was
expected, has sued the state, and the outcome as well as the potential feasibility behind localized bans remain to
be seen. The U.S. is not alone in its scrutiny. India banned TikTok following an armed confrontation with China
in 2020, and the European Union has warned of a ban if TikTok doesn't comply with the Digital Services Act by
the September 1, 2023 deadline.
This would serve as a significant, but by no means fatal, blow to TikTok’s parent company ByteDance. We
estimate less than a quarter of total revenue comes from international markets via TikTok, with the rest coming
from TikTok’s sister app Douyin in China, as well as some minor services and software revenue.
More importantly, the question of sovereignty in relation to the hardware, software and algorithms underpinning
society and media consumption is a fraught one. Other social networks, including YouTube, Meta and Snap, would
likely benefit from bans of TikTok and ByteDance’s fast-growing Pinterest/Instagram-like app Lemon8, but the
ability for algorithms to influence public dialogue and sentiment, and the depth and security of data collected by
digital platforms are not necessarily areas that other companies (albeit European or American-owned) want to
open to government scrutiny.
In the short-term, most advertisers are likely to continue with existing campaigns given the app's popularity with
consumers, however it’s likely many will approach any long-term arrangements with TikTok with caution given the
uncertainty surrounding its tenure in many of the world’s largest markets.
POLITICAL, LEGAL, REGULATORY
16

In the U.S., it has long been our standard
practice to exclude political advertising revenue
from our primary analyses of growth because of
the skewing effect it has in non-election years.
For a sense of scale, in 2022, we estimate that
U.S. political advertising revenue of $12.5 billion
would rank 11th if it were its own market, just
behind Australia and ahead of South Korea.
It may soon become imperative to exclude
political ad revenue in other markets as well.
Which markets is likely to be a question of
regulations governing campaign spending as
well as market size. In the U.K., there are limits
on how much candidates can spend during an
election, and controls on the sources of funding.
However, Brazil’s campaign finance regulations
were recently changed, reducing previous
restrictions, and it’s possible that political
spending contributed to the increase in Meta’s
Brazilian revenue (as noted on page 14) and
digital revenue more broadly. Data from Meta’s
2023 annual filing will show whether Brazil
retains its ranking in Meta’s top markets and
may offer a clue as to what role political
spending had on the market’s growth in 2022.
Of the markets that recorded growth above the median
in the 2022 election year, some impose limits on
spending in the millions — significantly higher than the
European markets mentioned above (e.g.: Kenya and
the Philippines), some do not limit the size of donations,
and some limit candidate spending only if that candidate
accepted funds (e.g.: the U.S.). Any restrictions that do
exist may be open to abuse; there was news in Sweden’s
2022 election about political parties allegedly advising
donors on how to bypass rules against anonymous
donations.
Correlation does not equal causation (beyond the
well-established impact of U.S. political spending),
but it is an area that we continue to monitor.
In the U.S., advertisers using local TV (one of the largest
beneficiaries of political ad spending) have adjusted
strategies and allocations in election years to mitigate
the effects of the loss of inventory to political campaigns.
As markets with elections in the coming year come to
grips with the rising adoption of digital platforms and
targeted campaigns (where targeting is legal), we
expect more frequent and pervasive discussions about
mitigating the potential effects of political advertising:
increased costs, competition for inventory, polarization
of media channels and brand safety (ad adjacency).
17
POLITICAL ADS
Of the 62 markets we track, 14 had
major elections in 2022 and more
than half of those saw growth above
the global median. Of the markets
that had major elections but grew
below the median rate in 2022,
Denmark, Austria, Slovenia and
Italy have limitations on individual
donations or campaign spending,
according to the Institute for
Democracy and Electoral
Assistance. Additionally, Denmark
prohibits political advertising on TV
during the campaign season. Serbia
has limitations on donations, but
not limits on spending, and
Colombia has spending limitations
although significantly higher than
those of its European counterparts.
ELECTION MARKETS VS. MEDIAN GROWTH
Political,
Legal,
Regulatory:
TACTICAL
Source: GroupM, IMF
Notes: Turkey, Argentina shown inflation adjusted. X Axis is shown on a logarithmic scale

18
MISINFORMATION MALADY
Political,
Legal,
Regulatory:
TACTICAL
A topic of discussion in governments around the
world is the concern around misinformation,
especially disinformation perpetrated by state actors.
We expect platforms including TikTok, Meta, Twitter
and YouTube to face pressure from governments
regarding their ability to identify, prevent, take down
and report on both misinformation and
disinformation.
This could impact development resources allocated to
advertising product upgrades or innovation over the
near term; however, more mature platforms may have
advantages due to previous experience and past
learnings. That said, tactics and algorithms continue
to evolve, and without substantive efforts on the part
of these platforms, government and consumer
confidence may rapidly erode.
In Brazil, legislators are still debating Bill 2630 (at the
time of writing), also known as the “fake news” law,
which would make social platforms more responsible
for misinformation and illegal materials on their sites.
We should note that misinformation is not exclusive
to digital channels, but their vast reach alongside the
challenges in moderating so much content and the
use of algorithmic recommendations that can promote
incendiary content make them a current focus of
regulators worldwide.
A topic of discussion
in governments
around the world is
the concern around
misinformation…

19
Technology’s gift of access to information, both via the mass market access to cameras and hardware capable
of capturing live events and the cataloging of information on the web (especially on social networks) has had
huge impacts in the world of media, advertising and beyond. The ability for private citizens to document and
distribute events from the Arab Spring to the deaths of Eric Garner and George Floyd in the U.S. has
undoubtedly brought attention to issues and locations not always prominent in major media coverage.
DIGITAL NEWS
Political,
Legal,
Regulatory:
STRATEGIC
$100.5
billion
$18.3
billion
2023
2003
Independent news and media
organizations still provide a critical
role in providing communities with
responsible and trustworthy journalism.
Professional news providers (whether local
papers or global outlets) are facing a significant
challenge in supporting the high costs of
skilled journalists and adequate editorial
oversight given the diminishing audiences
of their traditional distribution channels:
physical newspapers and linear TV. Global
traditional newspaper revenue is forecast
to be $18.9 billion in 2023, down from
$101.4 billion 20 years ago. The shift to
mobile phones, online search and social media
has pushed news publishers into one of two
main camps: either erect a paywall and push
to grow subscriber revenue or maintain free
access and rely more heavily on advertising.
The recent dissolution of Buzzfeed News, the
bankruptcy filing by Vice and the declining
valuation of Vox — all adherents of the latter
strategy — seem to negate its viability,
although another example in the form of The
Guardian seems to offer a hybrid option. The
Guardian reported more than a million digital
supporters in July 2022 and revenue growth
at the parent company of 13% year-on-year.
TRADITIONAL NEWSPAPERS
However, independent news and media organizations still play a critical role in providing communities with
responsible and trustworthy journalism, a service that must adapt to the rapid change in consumer media behaviors
over the past decade. Some news organizations have fared better than others in evolving their business and revenue
models to better reflect the current media environment, but the challenges facing these organizations remain and
have led to a number of political initiatives worldwide that touch on the dynamics of the news economy.

20
News publishers, while perhaps slow to embrace new
monetization and distribution methods, may be the
beneficiaries of political remedies. There is legislation
currently being debated in Canada that would guarantee
news publishers the ability to join together in negotiations
with aggregators like Google and Meta. Similar legislation
(the News Media and Digital Platforms Mandatory
Bargaining Code) was passed in Australia in 2021, however
the largest online platforms entered into a number of
private, and non-disclosed, deals that for all intents and
purposes exempted them from the requirements of the bill,
lessening the bill’s impact on local and global advertising.
While Canada’s bill will likely go through additional rounds
of debate and amendments (hence why it falls in our
mid-term time horizon), the outcome could have effects
globally as there have also been initiatives introduced in
the U.S. (Journalism Competition and Preservation Act)
and the U.K. (Digital Markets, Competition and Consumers
Bill). That said, passage is far from guaranteed.
Maintaining news investment
can be a strategic option for
advertisers looking for brand-
suitable environments for their
marketing messages.
Political,
Legal,
Regulatory:
STRATEGIC
Regardless of whether content aggregators are
forced to negotiate new terms regarding the
availability of news links and article snippets in the
years to come, advertisers and agencies can act to
support news and journalism now. Despite long-
held concerns about brand adjacency to news
content, recent research points to positive or neutral
sentiment regarding ads on quality news sites, and
greater positivity than ads on low quality non-news
sites. Maintaining news investment can be a
strategic option for advertisers looking for brand-
suitable environments for their marketing
messages.

21
DATA PRIVACY
When GDPR was enforced in 2018, there was a significant impact on the companies involved in digital advertising,
whether agency, advertiser, publisher or ad tech provider. There was a rush to build new measurement tools and
update existing tracking technology, not to mention the rollout of the now-ubiquitous consent pop-ups on websites.
The message from the European Parliament seemed clear: If you can’t gain your audience’s explicit trust and
consent to track their behavior across the web, you probably don’t deserve it. Explicit opt-in and consent
mechanisms have added some friction, but also, almost certainly, a greater degree of understanding and
transparency for people navigating the web.
Five years later, GDPR is back in the news as the Ireland Data Protection Commission (DPC), directed by the
European Data Protection Board (EDPB), has fined Meta $1.3 billion for transferring the data of EU citizens
to the United States. Meta is appealing this ruling and has said in earnings calls that the EU makes up 10%
of its revenue.
A separate case involving Meta and the Ireland DPC relates to Meta’s reliance on their platform’s terms and
conditions, or its contract with users, for gaining consent to collect user data and use it for targeted advertising.
The EDPB has instructed the Ireland DPC to order Meta to bring its processing of personal data for behavioral
advertising into compliance with GDPR within three months of January 2023. Meta has appealed and, as of the
time of writing, there was no conclusion posted on the Ireland DPC website. The language from the EDPB has been
clear, with the EDPB Chair saying, “The EDPB binding decisions clarify that Meta unlawfully processed personal
data for behavioral advertising. Such advertising is not necessary for the performance of an alleged contract with
Facebook and Instagram users.”
Any ruling aligned with the EDPB’s interpretation of GDPR could mean changes to Meta’s consent mechanism
globally given the complexity of maintaining multiple versions of the service for the EU and the rest of the world.
This could result in actual and feared “signal loss” similar to the rollout of Apple’s App Tracking Transparency
(ATT) update, that is often blamed (including by Meta itself) for slower advertising growth in 2022. We maintain
the GroupM position that while Apple’s ATT may have had an impact on the shares of advertising revenue among
various media owners, it did not have a demonstrable effect on overall advertising industry revenue totals. This
EDPB ruling is likely to have a similar impact (assuming, again, that the eventual conclusion is that Meta must
change its processing of data). Increasing trust and transparency among audiences and consumers should, in the
long-term, be more valuable than behavioral data that can be, in many cases, replaced with synthetic audience
data, contextual data and properly consented conversion data.
The global advertising industry,
spurred by regulations in the EU,
U.S., India, Singapore and other
markets, has been moving toward a
future where third-party cookies are
obsolete and data minimization and
clean rooms help limit the need for
broad and deep access to behavioral
data across web properties. The
increasing use of AI (such as in data
clean rooms, synthetic audiences,
algorithmic recommendations and
other tactics) should help mitigate
the transition to a reduction in
cross-site tracking.
Political,
Legal,
Regulatory:
STRATEGIC
GLOBAL DIGITAL ADVERTISING GROWTH
Source: GroupM
Safari block
third party
cookies
GDPR
Apple
launches
ATT

22
INTERNET PROTECTIONS — SECTION 230 AND
CONTENT AND ALGORITHMIC LIABILITY
The two largest sellers of advertising, Google and Meta as well as ByteDance's TikTok have attracted audiences
and advertisers to their platforms partially because of their scale and the breadth and variety of content. And
while moderation efforts (both human and technological) play a role in protecting those audiences and
advertisers, it is without doubt on a different scale in terms of the costs and liabilities involved in broadcasting
content on national television. Global laws, like Article 230 in the U.S. protect these platforms from being held
liable for content that their users post.
This has meant advertisers and their agencies must identify their risk tolerance level for each platform and
partner with user-generated content. Much of the risk can be mitigated with dedicated brand suitability and
exclusion efforts, allowing advertisers to continue having their marketing messages seen by the large audiences
these platforms attract. Most advertisers would almost certainly prefer environments with less associated risk,
may view campaigns on these platforms as the “least bad alternative.” That is, better than not advertising at all,
and better than the potential additional cost to satisfy reach and sales goals via alternative partners. That said, the
process of creating alternative campaign plans and budget allocations is often worth it as it provides the advertiser
with the credible ability to walk away from a negotiation if the media partner is unable or unwilling to meet their
terms.
Political,
Legal,
Regulatory:
STRATEGIC
Creating alternative campaign plans
and budget allocations is often worth
it as it provides the advertiser with
the credible ability to walk away
from a negotiation if the media
partner is unable or unwilling
to meet their terms.
In the case of the largest digital platforms outside
China, including Google, Meta and Amazon, it is
important to remember that even the largest
advertisers do not have the same negotiating
power that they enjoy in the linear TV market.
We estimate that large advertisers, and the agency
groups that represent them, account for less than
a third of Google’s and Meta’s revenues. These
platforms have a long-tail of smaller advertisers
using their self-service advertising offerings, and
these companies may not be as reactive to
reputational risks as billion-dollar brands. This is a
key reason why past boycotts of social platforms
haven’t impacted their revenue in a major way.

23
Political,
Legal,
Regulatory:
STRATEGIC
It is in the best
interests of the
entire industry
to ensure the
health and
safety of future
generations of
audiences and
consumers.
Recently there is seemingly more willingness
among some legislators and regulators to
intervene. In the U.S., the Protecting Kids on
Social Media Act and the state of Utah’s proposed
age limits on social media were introduced even
before the U.S. Surgeon General’s newest
Advisory on Social Media and Youth Mental
Health. Language from the advisory suggests,
“Technology companies can better and more
transparently assess the impact of their products
on children, share data with independent
researchers to increase our collective
understanding of the impacts, make design and
development decisions that prioritize safety and
health — including protecting children’s privacy
and better adhering to age minimums — and
improve systems to provide effective and timely
responses to complaints.” Advertisers and
agencies should be aware of current legislation
even though the final laws, if they are enacted,
may look substantially different.
After the U.S. Supreme Court declined to tackle
Section 230 in two rulings in May 2023, any
substantive changes are most likely to come from
legislative efforts not just in the U.S. but also
Europe, Latin America, and elsewhere. In
the U.K. the Online Safety Bill has stalled, but
France’s National Assembly has passed laws
mandating parental controls on connected devices
and asserting children’s rights to their own
images.
It remains to be seen what impact any of these
initiatives and policies will have on the media
owners and their advertising offerings. And any
resolution will more than likely stretch beyond
the two-year time horizon — it was five years after
the U.S. Surgeon General’s initial Advisory on
Smoking and Health before Congress prohibited
cigarette advertising on television. Whatever the
timeline, it is in the best interests of the entire
industry to ensure the health and safety of future
generations of audiences and consumers.

24
The ability to use AI to help in the creative
process could have major benefits to
the media and advertising industry,
if it is deployed in an ethical and
transparent way.
The EU AI Act would require companies deploying generative
AI to disclose any copyrighted material used to develop their
systems. It’s unclear whether this would apply to machine
learning algorithms for ad effectiveness.
Despite the copyright protection limitations highlighted
above, one of the issues the Writers Guild of America (WGA)
is hoping to settle as part of its contract negotiation (and
current strike, as of the time of writing) is the use of AI.
2
1
Generative AI has leapt into the mainstream and certainly into the media diet of marketers worldwide. There
are obvious implications for the creative side of the business: generating marketing messages and creative
assets with the potential to personalize those messages inexpensively at scale. Beyond the questions of
augmentation versus substitution of human labor (which we cover on page 46), there are also open questions
as to the intellectual rights associated with AI generated assets.
The U.S. Copyright Office wrote in recent guidance that images generated via a text prompt to AI models like
Midjourney or DALL·E 2 could not be granted copyright, however it left the door open to works that contained
elements generated by AI. In Japan, the AI Strategy Council submitted a draft that said it would not enforce
copyrights on assets used to train AI. While these questions work themselves through government agencies,
we are likely some way off from commercials or even logos developed fully by AI, but simple text generation
for marketing copy or creative asset personalization are likely in the short term.
AI & COPYRIGHT
Two other things to note as we watch
the development of rules and standards
in this space:
Political,
Legal,
Regulatory:
STRATEGIC
(see the Technology section for more).

Increases in shipping costs could lead to
a reduction in Chinese sellers advertising
abroad in
the future. In the midst of discussions around the world about banning TikTok
(see page 16), the U.S. House of Representatives passed another bill
that highlights the geopolitical tension between the U.S. and China.
H.R. 1107 would direct the U.S. Secretary of State to work to change
China’s designation from a “developing country” to a “developed
country” within various non-governmental organizations including
the Universal Postal Union.
This may seem like a rather trivial change, but it could have impacts
on the $5.8 trillion global projected e-commerce sales in 2023 and
the $125.7 billion in retail media ad revenue (see more on page 32).
Currently, China’s developing nation status means that it pays
reduced rates (called terminal dues) to postal organizations where
its merchants and manufacturers ship their goods. If the U.S. is
successful in effecting a change in designation, this discount would
likely vanish. That’s a big if, as there’s no guarantee China’s
designation will be changed by organizations including the World
Bank and World Trade Organization, and the next Universal Postal
Congress is only due to convene in 2025.
If, or once, China is reclassified as a developed nation, it may
challenge the unit economics of Chinese manufacturers shipping
goods to international markets including the U.S. and Europe.
Currently, Chinese manufacturers are a significant source of
advertising revenue for retailers (i.e., Walmart and Amazon) as well
as other digital ad sellers like Meta. In fact, Mark Zuckerberg noted
the impact of Chinese advertisers on Meta’s performance in the
company’s first quarter 2023 earnings call. Increases in shipping
costs could lead to a reduction in Chinese sellers advertising abroad
in the future.
Also in question would be the advertising by Chinese retailers
seeking global expansion. Temu and Ali Express (owned by PDD
Holdings and Alibaba, respectively) have been advertising in
pursuit of customers and revenue outside China, with Temu
investing in two 2023 Super Bowl spots as part of that strategy.
If these retailers, which promote the low cost of goods on their
platforms, were to face significant increases in their shipping costs,
it could lead to a revision in strategy — either raising prices in line
with local players or exiting certain markets.
CHINA — WHAT’S IN A NAME?
Political,
Legal,
Regulatory:
EMERGING
OPPORTUNITIES
25

26
Political,
Legal,
Regulatory:
EMERGING
OPPORTUNITIES
Current sentiment among the world’s government
watchdogs and antitrust agencies seems to be that
bigger is not always better. A year after Meta was
forced to give up its planned acquisition of Giphy
(which has now been sold to Shutterstock),
Microsoft’s acquisition of Activision Blizzard (one
of the largest global video game makers) is still in
question after it was challenged by the U.K.
Competition and Markets Authority (CMA) and
the U.S. Federal Trade Commission (FTC), but later
approved by the EU’s competition commission.
Microsoft has already committed to appealing the
decision and the acquisition may go ahead, but the
challenges signal a willingness among government
regulators to take on difficult cases and perhaps shift
from a narrow definition of “harms to consumers”
in looking at merger outcomes beyond consumer
prices.
ANTITRUST CLIMATE
So-called “big technology” has been a particular
focus of antitrust agencies in the U.S. and Europe.
Companies that had previously pursued frequent,
and often large, acquisitions in the media,
entertainment and advertising technology space
have likely tempered ambitions for acquisitions
likely to draw scrutiny from the FTC and CMA.
This is likely to lead to continued development
of smaller media and advertising players over
the near-to-medium term. However, to the extent
that a shift in ideology or focus occurs within those
agencies, it could lead to a spate of M&A activity
over the next two-to-five years, potentially leading
to consolidation of ad tech and media companies.
Tegna /
Standard General
M6 / TF1
Meta / Giphy
Meta / Within
Microsoft /
ActivisionBlizzard
Blocked and
challenged
mergers

27
GLOBAL INFLATION AND
THE LAWS OF FRICTION
In our December 2022 report, we noted the resilience
of consumers in the face of rising inflation as a sign
that advertising revenue would not fall precipitously
in 2023. The strength of consumer spending held in
January of this year, buoyed by robust spending in
China in the Lunar New Year period, especially on
luxury goods and movie theater tickets.
And while a milder-than-expected European winter
and falling energy prices have been a welcome boon
to consumer pocketbooks, retail sales data from the
months after January show a slowdown in consumer
spending as inflation remains well beyond central
bank targets in many markets. For a time, inflation
acted as a boost to many company revenues as input
cost increases were passed on to consumers, and
consumers bore the added cost, confident in some
excess savings from the pandemic and relatively
robust labor markets in many countries. Now, we
appear to have reached a point where continued price
increases have led to added “friction” in consumer
spending, with some auto manufacturers cutting
prices and CPG companies turning to product mix
and pack price architecture rather than price increases
to maintain volume growth in 2023.
We expect an ongoing trend of normalization to
play out in the second half of 2023 and 2024 with
pandemic-era supply chain shortages a vanishing
issue and inflation slowly falling, although the IMF
projected in April that global inflation would be
7.0% in 2023 — better than 2022’s 8.7%, but still
well above “normal” levels.
Unemployment levels, despite media attention on
multiple rounds of technology and service sector
layoffs, remain low with the U.S. at 3.7%
(May 2023), Germany at 2.9%, Canada at 5.0% and
the EU at 6.1% as of April 2023. Assuming no
sudden or significant shocks to these figures, our
baseline assumption remains that an economic
slowdown will not become a deep and prolonged
global recession.
Economic:
TACTICAL
Source: Eurostat, StatsCan, U.S. Bureau of Labor Statistics (BLS) and ONS
UNEMPLOYMENT RATE
2.9%
(March 2023)
GERMANY
ECONOMIC

28
These data points support our
forecast of positive nominal
advertising growth of
Economic:
TACTICAL
GLOBAL RETAIL SALES
Source: US Census, NBS (China), ONS (UK), Singapore Department of Statistics, StatsCan, METI
(Japan), Destatis (Germany), Eurostat, Australian Bureau of Statistics
5.9% for 2023,
consistent with our
December 2022
forecast.
ECONOMIC

One of the secular drivers GroupM has long maintained as a key
source of growth for advertising revenue over the last decade has
been the formation and growth of new businesses, including
small businesses and fast-growing venture-funded start-ups.
Many of these start-ups are included in a sector we call “digital
endemics” — companies whose businesses are primarily online —
a group as varied as the wider economy, ranging from dating and
gaming apps to business productivity apps, last-mile delivery
services and fintech and crypto. As interest rates rose over the
last 12-18 months, we noted a deceleration (and in some sectors
a decline) in marketing and sales expenses among this group of
digital endemics. This was to be expected in a sector long reliant
on cheap capital to fund a “growth at all costs” mentality marked
by high intensity advertising as companies used marketing to
acquire users. It is important to note that our composite only
includes public companies, and private companies arguably will
have found it even more difficult to secure capital to support
marketing efforts over the last year.
Among our composite of digital endemics, excluding larger
established companies like Google, Meta and Amazon (as well
as travel), the median advertising spend was 21.8% of revenue in
2018 when interest rates in the U.S. and the U.K. (where many
digital endemics are based) were 2% or lower. In 2022, median
advertising as a percent of revenue fell to 14.0% as interest rates
in the U.S. and U.K. climbed to between 3% and 5%.
Then in March, Credit Suisse announced
a rushed merger with UBS (creating an
institution with assets twice the size of
Switzerland's GDP) and American
financial institutions Silicon Valley Bank
(SVB) and First Republic were taken over
by the U.S. Federal Reserve as runs on
the banks exposed big bets on the digital
endemic sector and management
decisions shook investor confidence.
First Republic Bank had made a bet on
crypto and SVB was a preferred partner
for many start-ups and venture-funded
businesses, which, thanks to the interest
rate increases mentioned and a less
hospitable environment for raising
capital, had begun to draw down on their
cash balances.
Amid this banking shake-up, there were
some customers (and institutions) who,
whether to mitigate the risks of bank
accounts greater than the FDIC insured
amount, or seeking better financial
returns, shifted money from bank
savings accounts to money markets and
government bonds. This in turn led to
concerns about the lending environment
in the U.S. and abroad, a potential
limiting factor on the formation and
growth of not just large start-ups, but
also smaller businesses. We had
expected to see this impact in the March
business application and registration
data. However, 1Q 2023 new business
applications in the U.S. were up 4.0%
over the same period in 2022 whereas
in the U.K., business applications were
down 22.0%. March data suggests the
European Union business applications
were up 8.2% year-over-year, with
Germany up 38.8% and France up 1.5%.
With April data now available in some
markets, there does appear to be a
deceleration, though rates remain above
pre-pandemic levels except in the U.K.
29
INTEREST RATES & NEW
BUSINESS FORMATION
Economic:
TACTICAL
DIGITAL ENDEMICS ADVERTISING % OF TOTAL REVENUE
Source: GroupM analysis of company filings
21.8%
14.0%
ECONOMIC

30
These seemingly contradictory trends (the
deceleration of digital endemic start-ups and
the resilience of new business applications),
may offer insight into the performance of media
owners that rely disproportionately on these
advertiser sectors. Meta and Google both receive
a majority of revenue from small businesses and
companies buying directly (that is without a
media agency), often digital endemics with
in-house media teams. The slowdown in digital
endemic advertising aligns to ad revenue declines
at Google and Meta between the second quarter
of 2022 and the first quarter of 2023 (as well as
a broader impact on media sellers across the
digital and traditional media landscape).
However, this softening of demand, as it was
referred to in multiple earnings calls, hasn’t
translated into massive declines outside of linear
TV, and some media owners have continued to
see double-digit growth, pointing to an uneven
impact and likely continued spending by small
businesses (as well as some large advertisers in
CPG, luxury and travel, e.g.).
Economic:
TACTICAL
U.S. BUSINESS FORMATION (SEASONALLY ADJUSTED)
Source: U.S. Census Bureau
Some media
owners have
continued
to see double-
digit growth,
pointing to an
uneven impact.
ECONOMIC

31
We estimate the global e-commerce share of retail sales will hit 19.3% this year,
up from 18.8% in 2021, and 14.5% in 2019, pre-pandemic. This year, we have
added Singapore to our tracked markets, which falls below China, but above
Japan and Australia in terms of e-commerce penetration.
E-COMMERCE PENETRATION
Economic:
STRATEGIC
GLOBAL E-COMMERCE SALES AS % TOTAL RETAIL SALES
LAST MILE DELIVERY SERVICES TOTAL REVENUES
Source: GroupM, U.S. Census, NBS, METI, Destatis, ABS, ONS, Singapore DOS, StatsCan ⋅ Excluding food services
Global
e-commerce
share of retail
sales will top
19.3%
this year,
up from
18.8%
in 2021, and
14.5%
in 2019, pre-
pandemic.
Source: GroupM analysis of company filings ⋅ Note: Revenue
includes ride-hailing and other services alongside last mile.
Similar to our report in
September 2022, we
include motor vehicle and
parts sales and petrol sales
figures into our retail media
and e-commerce sales
figures, but we exclude food
services. Including food
services in the mix reduces
the global e-commerce
share of sales to 18.5%.
This section of the market
is set to continue growing
as mobility and last-mile
delivery services expand
globally, targeting a mix
of restaurant and
goods delivery.
ECONOMIC

32
As seen in the chart on the previous page, many of these mobility platforms are growing ad revenue from retail
media networks, and they are already a significant source of investment for CPG companies especially. In our
previous September and December forecasts, we had excluded the mobility sector from our retail media
estimates; however, given their importance to many CPG advertisers and the increasing share of goods
deliveries, we have revised our retail media data to include these companies for all years.
This has had a relatively limited impact in 2023 (total adjustments from June to December added $3.8 billion
to the estimate, not all attributable to the addition of mobility companies) but will be a driver in retail media
reaching $175.7 billion in 2028, when it is forecast to account for 15.4% of total ad revenue.
Economic:
STRATEGIC
Global expansion of retail and e-commerce
platforms is more challenging logistically
than scaling a fully digital product like
short-form video. In some cases, retailers
face entrenched incumbents, requiring
investment in marketing and user
acquisition. Temu, for example, used two
Super Bowl spots to raise awareness in the
U.S. early in 2023. In other cases,
platforms face infrastructure and financial
hurdles. Mexico, despite its proximity to
U.S. warehouses and a per capita GDP
figure higher than Brazil’s, lags behind
Brazil in bank account and debit/credit
card penetration, likely slowing adoption
and growth. In other cases, there are
regulatory hurdles. Turkey has banned
the sale of owned brands by e-commerce
intermediaries in their marketplaces. This
impacts players like Amazon in relation to
its Basics and other store brands, as does
a stipulation that manufacturers not be
prevented from offering their products for
lower prices via other retailers or
marketplaces.
In 2028, retail media
will account for
15.4% of total advertising
revenue, reaching
$175.7
billion dollars.
ECONOMIC

33
Of course, as time progresses, the blurred lines between offline and online shopping will make distinctions
harder to measure. Advertisers and retail media owners are already organizing accordingly. In several recent
CPG earnings calls, management spoke about the aim to view trade and marketing budgets more holistically.
And on the ad seller side, there have been mentions of case studies proving out the efficacy of online media
driving in-store sales. These divisions never meant much to consumers, and they will likely vanish for
advertisers too, as marketing and trade teams coalesce around shared data and outcomes.
Non-retailers are working to capitalize on the growth of e-commerce and retail media as well. TikTok and
Meta are re-launching shops in the U.S. and U.K. after underwhelming adoption in previous attempts. It
remains to be seen whether their audiences will find the experience as integral to their shopping as the
platforms may hope.
Economic:
STRATEGIC
LATAM E-COMMERCE PENETRATION
Source: GroupM, World Bank (2021, 2022)
43%
of individuals 15+
made a purchase
online or on
their phone
23%
of individuals 15+
made a purchase
online or on
their phone
MEXICO
BRAZIL
ECONOMIC

34
Disney and Fox sought to assuage investors early in 2023 with assertions in their earnings calls that they would be
rationalizing content spend in this “uncertain” and “challenging” economic environment. Warner Bros. Discovery
spoke about growing the ROI on their content investments, while ITV talked about the content investment ITVX
would require as a new technology related to the impact on share price. There are most certainly savings to be
found in the current glut of film, TV and streaming content. However, it is our position that share of viewing tends
to follow share of content spend, and players wanting to show positive returns on their streaming businesses are
likely to maintain competitive spending on content, especially sports rights and local language content, as the
battle rages for global subscriber and revenue growth.
CONTENT SPENDING
These large global content companies in
the table on the right continue to invest in
local language content as they build out
their streaming libraries, but actually
“local language” (e.g.: a show produced for
a Mexican audience) is less important,
seemingly, than language “family” with
Spanish-language content highlighted
across LATAM as well as Spain, and
English-language content rather market-
agnostic across the U.S., the U.K., Canada
and Australia. And there’s always the
potential for another break-out hit like the
Korean show Squid Game that appealed
to a global audience. Netflix, the company
that released Squid Game, recently
announced it would invest $2.5 billion in
South Korea over the next four years.
Economic:
STRATEGIC
CONTENT SPENDING
Source: GroupM analysis of company filings ⋅ Amortized costs
Company 2019 2020 2021 2022
Comcast 15.8 14.7 20.2 22.9
YouTube 10.0 14.0 20.0 20.0
Disney (PF) 14.6 17.6 17.5 19.7
Warner Bros. Discovery (PF) 16.9 16.7 17.9 17.6
Amazon 8.2 11.0 13.0 16.6
Paramount 13.7 12.1 14.7 16.0
Netflix 9.2 10.8 12.2 14.0
Local South Korean streaming providers are investing
in content to compete but are facing mounting
operating losses. CJ ENM, the media company
behind streaming service TVing, noted in their first
quarter 2023 earnings presentation that a reduction
in profitability reflected increased production-related
costs at TVing. Operating profit at the consolidated
company level was down 200% in the quarter versus
Q1 of 2022. Comcast, Disney and Warner Bros.
Discovery have also been under pressure to stem
losses within their streaming businesses, but they
benefit from the ability to amortize content over a
global audience.
All these investments may offer additional benefits
for U.S.-based companies with well-developed
international production pipelines this year given the
strike by the Writers Guild of America (WGA). In the
event of a prolonged production stoppage, studios
could look to productions in other English-speaking
markets to fill the gap, potentially limiting impact to
film and TV slates in one-to-two years’ time. Of
course, if the actors guild decides to strike as well, a
long-running strike is likely to have a greater impact.
Drama
Sports
Documentary
Comedy
ECONOMIC

35
The importance of spending by Chinese advertisers has garnered additional attention in 2023 after
Temu’s advertising push in markets outside China and Mark Zuckerberg’s comments in Meta’s Q1
2023 earnings call, where he said, “Within ad revenue, the online commerce vertical was the largest
contributor to year-over-year growth. … Online commerce benefited from strong spend among
advertisers in China reaching customers in other markets.”
This spending by Chinese advertisers remains an important secular driver, although its size and
geographic distribution also remain a significant unknown going forward as geopolitical tensions may
limit the ability of Chinese platforms and manufacturers to operate profitably overseas (see
page 16 regarding TikTok and page 25 regarding global e-commerce).
In past reports, we have
noted three secular drivers of
advertising growth that have
contributed to increases well
above global GDP growth,
most notably since the early
to mid-2010s.
Those drivers are:
RETURNING
TO THE MEAN
• Spending by Chinese advertisers abroad.
• Creative destruction — notably, the creation
of new businesses that are likely to spend
more on advertising than the businesses they
replace.
• High-intensity digital endemic advertisers.
The greatest change in these secular drivers has come from the category we call digital endemics. Not only
have higher interest rates led to more conservatism and decelerating growth of advertising expense, but as these
companies mature, advertising as a percent of revenue is likely to approach the levels of industry incumbents.
And, in turn, advertising growth is expected to more closely track GDP growth over the next two-to-five years,
with the potential for another period of high intensity advertising from start-ups as discussed below.
Note that for six of the top 10 markets, analysis showed a Pearson correlation coefficient of greater than 0.6
for GDP and advertising growth from 2000 to 2022, meaning that when GDP grew, advertising grew as well,
and vice versa. This directional correlation was less true for Japan, Brazil, Canada and China for the period
2000-2022 (although the R value for China improved to 0.7 in an analysis limited to 2015-2022).
Economic:
EMERGING
OPPORTUNITIES
The creation of new businesses, too,
continues and current regulatory
scrutiny of mergers and acquisitions,
especially in the areas of media,
advertising and technology, may
actually increase competition,
leading to greater advertising
intensity. By contrast, a market
with a true monopoly or even a
cooperative oligopoly could tend to
result in lower levels of advertising.
ECONOMIC

36
We are likely to see a “superbloom” of AI-backed start-ups gain scale over
the next two-to-five years, with many consumer-facing companies using
advertising to acquire users and grow revenue. This could lead to another
period of advertising growth above-and-beyond expected GDP growth.
As mentioned on page 29, a dynamic start-up environment buoyed by
internet and smartphone penetration as well as the easy access to capital
likely helped lead to a period of extraordinary growth in advertising
revenue from 2010-2021. This was an era of direct-to-consumer (DTC)
goods and everything-as-a-service.
In 2022, the rapid rise in interest rates, and the burst bubble of
expectations that consumer spending and e-commerce sales could maintain
the levels of the COVID-19 recovery stimulus period have now ushered in a
so-called “year of efficiency” (as CEO Mark Zuckerberg has called the
current ethos at Meta). There have been layoffs at many of the largest
global ad sellers including Amazon, Microsoft, Google and Twitter.
At the same time, media owners and technology companies are looking to
AI as the force multiplier in their businesses at a time when hiring freezes
have become more commonplace. The rapid and perfuse roll-out of the
Chat GPT public beta showed just how far large language models (LLMs)
have advanced in their abilities. Stock prices over the last several months
have seen significant ups and downs based on the perceived threat or
opportunity AI will bring to a company.
The contemporaneous nature
of these two events (the
explosion of AI tools like
Chat GPT, Bard, Midjourney,
etc. and the layoffs of tens of
thousands of tech workers) is
likely to lead many recently
let-go employees to start
their own companies, many
tied to AI. And these new
start-ups are likely to create
a new wave of digital
endemic marketers.
The timing of marketing
expense growth is slightly
harder to quantify, but we
could expect to see an
advertising growth benefit in
the next two-to-five years.
Looking at our composite of
digital endemic companies in
2016, the companies less
than five years old had a
median advertising expense
as a percent of revenue of
40.6%, whereas the
companies more than 10
years old had a median
advertising expense ratio of
15.2% (showing the trend of
moderated advertising
expense over time, albeit
still elevated compared to
fast-moving consumer goods
marketers, for example).
That two-to-five-year time
frame could be shortened by
further advancements in AI
technology or lengthened
if interest rates remain
elevated and venture capital
firms remain more cautious
with their dry powder.
START-UP BOOM 2.025
Economic:
EMERGING
OPPORTUNITIES
AI ANNOUNCEMENTS VS SHARE PRICES
ChatGPT
launches
ChatGPT
launches
on Bing
Microsoft
OpenAI
investment
speculation
Buzzfeed plans
AI content
Buzzfeed
news shuts
down
Source: Refinitiv
ECONOMIC

37
CONSUMER
SPENDING ON VIDEO
A persistent undercurrent of the
growth of streaming and CTV has been
that consumers will max out
at some undetermined number of
services or monthly spend, and that
this will limit the number of services
that will be winners in this new digital
environment. This sentiment seems
only to have gotten louder with recent
subscriber growth slowing at Netflix
and more data collected on
subscription churn. But it has long
been the position in This Year Next
Year that consumers will continue to
pay for quality content on whichever
services are investing in said content,
and that there is ample headroom for
total SVOD consumer spending,
especially in markets where pay TV
penetration has been historically high.
We have examined consumer spending
on video services across four markets
with varying degrees of pay TV
penetration to gauge the runway for
continued SVOD spending growth
(SVOD here includes subscription fees
for lower-priced ad-supported tiers).
In the U.S., where we have historical data going back to 2000, we can
see the growth of SVOD spending outpaces declines in both pay TV and
electronic sell-through (EST), which includes rentals and purchases on
platforms such as Apple TV. That said, SVOD still only represents
21.6% of consumer video spending in 2022 (versus 69.7% for pay TV),
and that ratio is similar in Japan and Germany. In the U.K., consumers
spend less on pay TV, leading to a greater share (28.9%) for SVOD.
While it will take years for pay TV penetration
to drop (we estimate fewer than half of U.S.
TV households will have traditional or virtual
pay TV in 2025), there are billions of dollars
worldwide in pay TV consumer spending that
represent an opportunity for streaming
services investing in content (see page 34 for
more on content spending).
This headroom taken together with the
current regulatory environment that makes
any further horizontal integration look
incredibly challenging (see page 26) points to
an immediate future where there is room for
multiple players at the table.
Social:
TACTICAL
CONSUMER SPENDING ON VIDEO
Source: GroupM, DEG, Ampere, OfCom, BFI,
Motion Picture Producers Association of Japan
U.S. CONSUMER SPENDING ON VIDEO
Source: GroupM, DEG, Company Filings
Note: Traditional Cable Includes vMVPDs
SOCIAL

38
SPORTS & SPORTS RIGHTS
Sports content, like virtually all other content, is now becoming more global
and digital as it expands beyond matches shown on linear TV to short-form
clips on social media and auxiliary content (such as alternative broadcasts on
CTV channels, influencer accounts and fantasy leagues) to allow for a more
personalized fan experience.
Globally, as content and audiences move to streaming platforms with on-
demand models, sports has remained the key driver for live TV viewing. But
leagues and rights holders are now increasingly focused on streaming
audiences with a number of new rights holders entering the field, including
YouTube (Google), Apple and Amazon (all among the top 25 sellers of
advertising globally). The ability for live sports to support a commerce
flywheel (the main source of revenue for Apple and Amazon) point to the
challenges facing media companies competing for rights with companies
boasting trillion-dollar market caps.
Competition is likely to stay fierce. In India, the streaming and linear TV
rights for the Indian Premier League (IPL) sold in 2022 for more than $6
billion dollars, with Disney ceding streaming rights to Viacom18. Estimates
for the National Basketball Association (NBA) rights range as high as $75
billion over multiple years and will likely result in a split of rights across
companies, with many expecting Warner Bros. Discovery to invest to keep
live sports audiences for its linear channels and new streaming platform Max.
Beyond media revenue, sports sponsorships are another source of growth
(albeit untracked within the scope of This Year Next Year currently).
The move to streaming
and digital assets could
have a significant
impact on how sports
are consumed, with the
ability for leagues and
media owners to offer
more personalized or
tailored content.
Already viewers of golf
can choose to watch
just their favorite golfers
rather than the curated
main feed, calling into
question whether sport
will remain the shared
experience it has
represented live and
on linear TV.
Social:
TACTICAL
Source: GroupM ESP, India
Note: Sports sponsorship and endorsement not included in TYNY totals
INDIA SPORTS SPENDS — SPONSORSHIP MEDIA
$1288
$1799
49% YOY
Growth
SOCIAL

39
UGC VERSUS PROFESSIONALLY
PRODUCED CONTENT
Social:
STRATEGIC
UGC VS. PRO CONTENT AS PERCENT
OF AD REVENUE
Source: GroupM analysis of company filings ⋅ All Revenue is Ex-China
UGC includes: YouTube, Meta, TikTok, Snap, Pinterest, LinkedIn, Twitter | Pro content includes all TV, Audio, Print revenue
60.2%
34.7%
9.8%
25.6%
SOCIAL
Similar to the atomization/democratization of news we discussed previously (see page 19) whereby every
person with a decent smartphone camera and a social media account is now a potential source of news,
so too has the creation of entertainment been distributed across an infinite number of individual creators
(and ultimately, though not quite yet) AI generators.
Back in November of 2010, a YouTube blog post highlighted how the number of hours of video uploaded
each minute had climbed to 35 from 24 just eight months earlier. Today, YouTube’s site says that figure
exceeds 500 hours every minute. By comparison, we estimate Netflix creates some 500-1000 hours of
content each year across all languages and markets.
Time spent with user-generated content (UGC) is somewhat harder to gauge on an apples-to-apples basis.
Not all markets measure YouTube alongside professional video, let alone TikTok, and self-reported surveys
on media usage are imperfect. One estimate from data.ai put monthly time spent with the largest global
UGC platforms, including TikTok, YouTube, Facebook, Instagram and Snapchat, at nearly 90 hours.
Consumption of professionally produced video (both linear and streaming) still maintains an edge over
video platforms, although generational differences are striking, with U.S. adults over the age of 65 watching
more than four hours of television per day on average (140 per month) versus individuals aged 15-19, who
spend fewer than two hours per day (60 per month) watching TV. So, for younger generations the scales
have likely already tipped in favor of UGC. In the same 2021 U.S. Bureau of Labor Statistics time use
survey, reading accounted for just 30 minutes per day (15 hours per month) including newspapers,
magazines and books.
In the U.K., recently published April data by the Broadcasters' Audience Research Board (BARB) showed
both SVOD/AVOD viewing and total video sharing viewing (which includes TikTok, YouTube and Twitch)
increasing year-over-year (9.3% cumulatively). Between January-April 2023, video sharing viewing grew
by 10.3%, faster than SVOD/AVOD viewing, which grew 7.1% year-over-year. Sports viewing has also
increased by 3.0% over the same period across Eurosport, Sky and BT. Weekly BARB data showed younger
audiences (aged 4-34) were also spending less than half the time that adults over the age of 55 spent on
broadcast viewing.

40
The disruptor in this space is the recent public availability of AI-generated text and images that enable
individuals, media outlets or even bots to quickly and easily produce content that could overwhelm UGC
platforms and the open web and make discoverability and verifiability of content even more
challenging. Already, any given piece of content may result in claims that it has been written by generative
AI, and on the flip side, some posts have circulated widely before being identified as AI-generated, as in the
case of the photo of the pope in a puffer jacket. A new category of advertising services companies to identify
AI-generated content and images will undoubtedly emerge.
The added difficulty for advertisers to ensure brand suitability or the potential reputational cost of reacting
to issues surrounding deep fakes could delay a further share shift of advertising revenue away from
professional, curated creators and distributors.
Some advertisers may want to align
their marketing messages with the
brand equity of professional content.
An ad for a luxury watch in The
Financial Times benefits from the
established reputation of that
newspaper.
The editorial processes in place within
professional print, audio and video
outlets can confer greater confidence in
brand suitability. That isn’t to say that
all professional media owners will be
brand suitable for all advertisers, or
that editorial controls always work.
2
1
Of course, there’s a question as to the amount of content on these
platforms that could be considered “professional.” Some content
creators have formed sizable media companies with significant
revenue streams outside of traditional TV distribution deals. And a
recent U.K. report from OfCom noted that some teens avoid posting
their own content because of the high bar set by influencers.
If the content on these platforms
is professional in quality and
influence (in some cases), and younger
generations are spending more time
consuming TikTok than TF1, what’s keeping
advertising dollars from shifting more substantially into
UGC? There are two potential reasons to highlight as
they are related to themes discussed elsewhere in this
report:
Social:
STRATEGIC
SOCIAL

41
Companies are seeing emerging markets as
critical areas for future growth. L’Oreal’s
President of Consumer Products Division said
in the business’s fourth quarter earnings call
that such markets “are key for [our focus on the
upper half of the middle class], representing
38% of this group. Take India, which is rapidly
growing into a beauty epicenter. In India, 70%
of our business comes from this upper half of
the Indian middle class, which will fuel the
market growth for years to come."
For the purposes of this text, we have used
a slightly modified list of emerging markets
based on analysis by the IMF. This list includes
Argentina, Brazil, Chile, Colombia, India,
Indonesia, Malaysia, MENA, Mexico, Nigeria,
the Philippines, Poland, South Africa, Thailand,
Turkey and Vietnam.
The growth and spending behavior of the
middle class in these emerging markets is not
homogeneous, as access to the internet and
different payment methods varies country
by country, region by region. While there are
significant portions of the population unable to
make discretionary purchases, the projected
population growth (net 200 million people by
2028, according to the World Bank) coupled
with local investments point to their growing
importance for global businesses.
World Bank data from 2021-2022 shows
that of the richest 60% of respondents in
the Philippines over the age of 15, 47% used
a mobile phone or the internet to buy
something, but that percentage drops to 36%
for all people over age 15. China, Poland,
Malaysia, Thailand and Chile all boast greater
than 50% penetration for online purchases
among the richest 60% of respondents.
THEY MIGHT BE GIANTS —
EMERGING MARKETS
Infrastructure and access to capital will be drivers of expanding opportunities
for advertisers in these emerging markets. Interest rate increases have
currently made the latter difficult, but there are numerous companies looking
to facilitate commerce from Jumia and Kwik in Nigeria to Shopee and Grab
across Southeast Asia.
Social:
EMERGING
OPPORTUNITIES
EMERGING MARKET MIDDLE CLASS
Source: World Bank (2021-2022) ⋅ Owns a debit or credit card, income, richest 60% (% ages 15+)
Used a mobile phone or the internet to buy something online income, richest 60% (% ages 15+)
Growth
Potential
Only 35%
of Indians
have a
credit/
debit card
SOCIAL

42
2021
expenditures (U.S)
$83,357
Similar to the geographic shift of consumers discussed, there is also a generational shift underway. The largest
advertising markets also have some of the largest percentages of adults over 65. In Japan, nearly 30%
of the population was above that threshold, and over-65s made up more than 18% of the population in Canada,
the U.K., Germany and France, according to OECD data from 2021.
SO LONG, BOOMER — AGING POPULATIONS
Vehicle purchases tell a mixed story, with net outlay representing the
highest share of total expenditures for millennials at 8.9% (versus 6.0%
for baby boomers), but Gen Z recorded the largest drop in total vehicle
net outlay versus 2019 — likely a result of COVID-19 behavioral patterns
as well as inventory shortages.
Entertainment represented a 5.6% share of total expenditures for both
Gen X and baby boomers in 2021 (shares were higher across all
generations than in 2019). Mean expenditures were highest for Gen X
at $4,694 annually.
Some advertisers are already focused on reaching Gen Z, and even
Generation Alpha, although expenditures for those aged 13 and younger
in 2023 are still de minimis. Beyond healthcare, which accounts for a
larger share of spending for baby boomers, advertisers of all categories
will no doubt be investing in reaching new customers in these younger
generations as they form brand loyalties and category purchasing habits
that are likely to drive lifetime customer value for brands.
Social:
EMERGING
OPPORTUNITIES
GEN X:
$62,203
Baby Boomers:
+9% vs. 2019
-3% vs. 2019
TOP 10 MARKET ELDERLY POPULATION
However, as this segment of the population ages, purchasing power shifts to younger generations: Generation X,
millennials and Generation Z. In the U.S. we have relatively robust, albeit lagged, data on purchases by generation
from the Bureau of Labor Statistics, and we can compare shares and growth of spending between 2019 and 2021.
In 2021, average expenditures of $83,357 were highest for Gen X and increased 9% over 2019 expenditures. By
comparison baby boomer expenditures decreased 3% to $62,203 on average.
Source: OECD
SOCIAL

43
In 2022, we released a report that estimated the portion of global
ad revenue that is AI-informed or AI-enabled, including the use of
machine learning optimization algorithms, natural language
processing and computer vision. By our estimate, AI will touch
more than half of all ad revenue in 2024 and will inform more than
two-thirds of advertising by 2028.
TEST, LEARN AND REPEAT
Note these estimations cover media revenue, not creative production. Neither do they account for media
workflows for strategists, analysts and data scientists that can be augmented by AI.
These AI tools are now being widely adopted across agencies, ad tech and media owners (well beyond the
largest tech platforms where they have been in use for the past decade or so), helped by the intuitive interfaces
and simple text-based input of tools like Chat GPT. We are in a period of rapid experimentation, learning and
optimization. Google and Meta have rolled out Performance Max and Advantage+, respectively, to apply AI
to budget allocation and optimization across their platforms. Innovative agencies have enabled their own
cross-channel allocation models as well as custom chatbots to interrogate and optimize media budgets.
Given the wide availability of algorithms and LLMs, for example, it seems unlikely at this point that the
mere application of AI will confer outsize benefits to individual companies. Differentiation and value is more
likely to come from access to high quality data (bearing in mind the increasing scrutiny of data privacy), the
skill and diversity of those working with AI models, and the ability to customize training data and outputs to
specific companies and/or individuals.
Technological:
TACTICAL
AI-ENABLED ADVERTISING
Source: GroupM
Non-Digital
Digital Search
Digital Non-Search
Digital OOH
Digital Audio
Digital TV
TECHNOLOGICAL

44
Search advertising has experienced a rapid rise from 1999, growing
from less than 1.0% of advertising that year to an estimated 22.6% in
2023 (a 34.5% CAGR). This growth correlates with a decline in directory
advertising as yellow pages searches transitioned online. This year we are
seeing an extraordinary level of innovation for what might have been considered a
relatively mature channel by digital standards. Microsoft’s Bing has integrated Chat GPT into
results and Google is planning an integration of their own with their PaLM2 large language model to
address the searcher’s question in a conversational narrative. Both have said ads will remain a part of the
search experience, with Google saying, “With SGE, Search ads will continue to appear in dedicated ad slots
throughout the page. In this new experience, advertisers will continue to have the opportunity to reach
potential customers along their search journeys. We’ll test and evolve the ads experience as we learn more.”
SEARCH
Technological:
TACTICAL
Despite the shift to
AI-generated,
conversational answers,
search growth is
forecast to decelerate
meaningfully over
the next five years
Despite the shift to AI-generated, conversational answers, search growth is forecast to decelerate
meaningfully over the next five years, increasing globally at a CAGR of 5.7% through 2028, as compared to
a 14.0% CAGR over the last five years. In addition to uncertainty over how these new search experiences
will impact customer journeys, there is another element already impacting the growth of pure-play search
platforms like Google and Bing: a shift in searches carried out on retail, video and social platforms such as
Amazon, TikTok, YouTube and Snap (which has its own AI chatbot called My AI). Amazon search revenue is
currently captured within the retail media line item, and TikTok, YouTube and Snap revenues are captured
in the digital “other” line item (non-search, non-retail). Both categories are projected to grow faster than
search in 2023, with retail estimated at 9.9% growth and other digital estimated at 9.0% growth versus
6.6% for search in 2023. That said, image-based search (e.g.: Google Lens) is likely to grow (see page 49).
TECHNOLOGICAL

45
Well before the technological innovations within the Strategic
and Emerging time horizons come to pass, advertisers (along
with their agencies and partners) will need to approach the
use of AI with conscientiousness and intentionality.
The potential for negative outcomes is not always understood
or debated in the rush to commercialize resources and
technologies. Consider that fewer than three months passed
between the release of ChatGPT’s public beta and the
beginning of Microsoft’s rollout of the technology within its
Bing search product. We don’t yet know how widespread
use of LLMs like Open AI’s Chat GPT, Google’s Bard, Baidu’s
ERNIE and others will impact society, but we can spend
time and resources now on considering the potential
consequences of bias, misinformation and abuse on public
audiences.
There are some efforts underway already. Adobe has
suggested a standard for labeling images that are created
in whole or in part using AI. This is becoming increasingly
important as tools are developed (including at Adobe) to
allow those without any technical ability to edit images.
While maybe not the most worrisome outcome of billions
of doctored images, there are certainly implications for
brands where images depicting their products in undesired
ways may appear very believable and be difficult to stop
and/or protect against.
One element deserving of greater transparency and attention
is the way AI algorithms are being trained and incentivized.
From the earliest days of post-IPO Meta (then Facebook),
CEO Mark Zuckerberg spoke of “time spent” as one of the
key ways the company optimized product and advertising
algorithms. This reinforcement learning, or giving AI targets
such as “time spent,” can lead to unintended consequences,
as any of us know who have spent much longer than intended
scrolling endlessly.
The recent focus on attention metrics could bring this
status quo from early social media and digital display into
the supercharged era of AI-enabled advertising. When
developing budget allocation and channel planning
strategies, advertisers will benefit from assessing activity
against business goals, along with environment and social
commitments, rather than relying solely on standard
metrics provided by ad sellers. AI-optimization of goals
related to product awareness and product benefit awareness
are unlikely to induce the same social pushback as attention
and consumption goals.
TRANSPARENCY,
TRUST AND INTENT
Technological:
TACTICAL
TECHNOLOGICAL

We are years
away (if ever)
from having
purely
autonomous
AI agents replace
members of the
marketing team.
However, there
are numerous
opportunities for
AI to perform
categories of
tasks, assuming
the appropriate
ethical and safety
guidelines are
in place.
46
AI will be incredibly transformative not just in its ability to analyze reams of data or create music, text and images,
but also as an underlying technology augmenting everyday tasks and decisions. WPP defines AI as “goal-directed
adaptive behavior,” the ability to make decisions in relation to a specific goal and learn to make even better
decisions with feedback over time.
We are years away (if ever) from having purely autonomous AI agents replace members of the marketing team.
However, there are numerous opportunities for AI to perform categories of tasks, assuming the appropriate
ethical and safety guidelines are in place.
Across WPP, we see there being six major avenues where AI can be most useful: task automation, content
generation, human representation, extraction of complex insights from data, improvement of decision-making
and the overall extension of the abilities of people.
AUGMENTATION
AND ADAPTATION
Technological:
STRATEGIC
Using algorithms to automate rote tasks and inputting text to
generate a delicately crafted email are already relatively common and
obvious uses of AI. But there are still safeguards required as these
use cases become more popular and sophisticated.
Human representation covers chatbots and avatars. How does the
dynamic play out when someone interacts with a non-human bot and
when it’s not clear to people who, in a group, is not actually human?
These introduce implications around trust and inclusivity with which
brands must contend.
Using AI to extract insights or predictions from tons of data is time
effective. It can help marketers understand personas and identify
patterns of consumer behavior. Teams can then manually evaluate
these AI-gathered insights or feed those learnings into a machine.
But can we expect people to extract the most value from those
insights, and can we trust AI to precisely optimize the results without
bias? There will need to be a decision on where automation and
optimization begin and end.
Beyond the digital world, AI can be used to extend our physical
abilities through the use of cybernetics or other tools backed by AI
technology, allowing us to enhance our performance in certain tasks.
In the metaverse, this extension of abilities lets your avatar make
decisions on your behalf.
In addition to the hype surrounding AI, the tight labor markets in
mid-2023 provide an impetus to adopt AI into existing workflows as
a means of increasing the productivity of existing teams, especially
related to insight extraction and rote tasks.
TECHNOLOGICAL

47
GENERATIVE AI AND
PERSONALIZATION AT SCALE
Generative AI technology has
Technological:
STRATEGIC
One area where production improvements could make a significant impact is in
the personalization of advertising messages and assets at scale. An automotive
company could create video of their car driving in the nearest city to whomever is
viewing their ad, for example, without having to travel with a production team to
film in multiple locations. Generative AI has been in use for years in the creation
of email subject lines. Now its use has expanded, along with the evolution of the
technology, to image backgrounds and more. And despite the remaining
questions surrounding copyright, for example, companies are working to bring
these use cases to life (the partnership between WPP and Nvidia is one example).
One other complication facing advertisers, agencies and platforms wanting to
develop personalized advertising at scale is the public or open-source nature of
existing tools such as OpenAI. Any prompts given to OpenAI are fed back into the
training data, making it unadvisable for any proprietary or personally identifiable
data. Thus, the benefit of generative AI is likely to improve with the creation of
closed or proprietary tools that may start with a large public set of training data
but are then limited to the prompts and optimization within an individual
company (or individual) such that data privacy and security can be better
controlled – an AI sandbox.
Within advertising, we are likely to see a diverging model where the largest
brands and agency networks develop their own generative AI tools, while small
businesses tap into those offered by platforms focused on that customer group
and can monetize investments over the long-tail of smaller advertisers. Meta
spoke to this opportunity in their first quarter 2023 earnings call, saying “Our
ongoing AI investments … will help us develop and deploy privacy-enhancing
technologies and build new innovative tools that make it easier for businesses to
not only find the right audience for their ad, but also optimize and eventually
develop their ad creative.”
TECHNOLOGICAL
expanded from email
subject lines to images,
audio and video.

48
Technological:
EMERGING
OPPORTUNITIES
As we move further along the time horizon, it gets more difficult to predict how technological advances will
impact the world of media and advertising. During the process of writing this section of the report, new
announcements were made seemingly every day, including the open letter from The Center for AI Safety
on May 30. Signed by AI researchers from Open AI and Google’s DeepMind, it calls for the mitigation of
risk from AI and compares the technology in potential severity to pandemics and nuclear wars.
DYNAMIC INSERTION
The less interruptive nature
of these messages could
also broaden the appeal of
ad-supported streaming
products, increasing available
audiences. As it stands today,
ad loads for some streaming
providers are increasing, and
audiences with the means to
subscribe to ad-free services are
likely to remain difficult to reach.
If development and use of the tools under the broad umbrella of AI can be done safely (and that
is a big if, requiring cooperation beyond the corporation or even national level), then there are
numerous potential applications within media and advertising, some of which have already
been discussed above. One opportunity, among many, to call out is dynamic content insertion.
With further advancements of the generative capabilities of AI, dynamic insertion of advertising
messaging into content, in less interruptive formats, could become more widespread. This
would potentially, alongside programmatic execution, open TV advertising to a wider variety of
small and medium-sized businesses that couldn’t afford the production costs and upfront
budgets traditionally associated with TV campaigns. Of course, opening the door to dynamic
insertion of products in post-production would require changes to the current process that
requires approvals upfront.
TECHNOLOGICAL

49
Currently a consumer is more likely to type a
search like “black sneakers” or “bicycle helmet”
into a browser or application. They may even
include a known brand name in the search.
Retail and brand sites in turn have optimized
for text searches via search engine optimization
(SEO) and keyword-based paid listings. But as
consumers switch to image-based searches, and
as CTV and social video offer more connections
to commerce, computer vision will determine
which products most closely match the item,
making it incumbent on brands to evolve
image-based marketing assets. This is already
a growing concern for luxury products where
look-alike designs are offered on discount retail
sites. Taking this one step further, the ability for
people with very little technical skill to feed an
image of any product into an AI generation tool
and get a CAD design file back — one which
could be easily altered (to avoid copyright
issues) and quickly manufactured using additive
technologies like 3D printing — could
dramatically impact retail. Platforms hosting
user-generated designs might become a starting
point for product searches, and an image search
of a bicycle helmet might return thousands
of designs, some offering to custom print the
product based on a scan of the customer’s
own head.
The potential for a more cluttered shopping
experience, the importance of visual brand
markers and the potential for further disruption
in control of the default retail search platform
warrant this inclusion as an emerging
opportunity.
Technological:
EMERGING
OPPORTUNITIES
#dupechallenge
73.5M
While we don’t have space in this report to touch on every technological advancement expected over the next
five years (robot butlers! robo-taxis!), there is one area of technology, that when paired with generative AI and
next-generation manufacturing, could have an outsize impact on the way people search for and buy products
(and hence how those products are advertised). This is the use of computer vision and computer aided design
(CAD) to map objects in the physical world and recreate them virtually. The development of mixed reality and
smart glasses, on top of the ongoing evolution of smartphone cameras and a behavioral shift from text to
images, are likely to support a move to more image-based search.
TECHNOLOGICAL
RETAIL REVOLUTION

CONCLUSION
50
Advertising remains
a constant in a
period of social
and technological
evolution.
We are at an inflection point where the secular drivers
of advertising growth above and beyond GDP growth
are maturing, the pandemic upheaval is receding and the
dynamic rise of digital advertising has slowed. This is
the basis of our underlying forecast of mid-single-digit
advertising growth over the next five years.
However, the pervasive impact of AI on the world of
advertising could change that. There are myriad ways in
which content and image generation and modification
could disrupt the value exchange between audiences and
consumers and the media owners, whose businesses are
subsidized by advertising, vying for their time and attention.
An explosion of quality content and AI-enabled startups
could lead to faster growth. Or a flood of lower-quality
content could fuel a race to the bottom and the erosion
of audience trust in advertising.
Advertisers in this environment will be well-served by
having proactive guidelines and the right partners to
navigate these waters so that choices in budget allocation
and the use of AI are made intentionally with the long-term
health of the business in mind.
JUNE 2023 • T H I S Y E A R N E X T Y E A R I G L O B A L M I D - Y E A R F O R E C A S T I CONCLUSION

U.S. Dollars
in Millions
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
TV/ Pro. Video $156,955.8 $154,649.6 $136,177.5 $154,937.9 $157,983.2 $158,307.1 $161,440.7 $165,009.8 $167,710.8 $170,088.7 $172,951.0
• Growth 0.3% -1.5% -11.9% 13.8% 2.0% 0.2% 2.0% 2.2% 1.6% 1.4% 1.7%
•Share 27.5% 24.6% 21.9% 20.0% 19.1% 18.1% 17.4% 16.9% 16.3% 15.7% 15.1%
Traditional TV 148,220.7 144,518.4 123,312.2 136,782.6 135,103.7 132,411.7 131,806.2 132,805.0 131,755.2 131,652.4 130,442.5
• Growth -12.% -2.5% -14.7% 10.9% -1.2% -2.0% -0.5% 0.8% -0.8% -0.1% -0.9%
• Share 94.4% 93.4% 90.6% 88.3% 85.5% 83.6% 81.6% 80.5% 78.6% 77.4% 75.4%
ConnectedTV+ 8,735.1 10,131.2 12,865.3 18,155.3 22,879.6 25,895.4 29,634.5 32,204.8 35,955.6 38,436.3 42,508.5
• Growth 34.4% 16.0% 27.0% 41.1% 26.0% 13.2% 14.4% 8.7% 11.6% 6.9% 10.6%
• Share 5.6% 6.6% 9.4% 11.7% 14.5% 16.4% 18.4% 19.5% 21.4% 22.6% 24.6%
Audio 30,216.6 30,494.8 22,805.4 26,487.7 27,263.4 27,182.8 27,300.1 27,218.2 27,264.4 27,301.8 27,211.7
• Growth -1.7% 0.9% -25.2% 16.1% 2.9% -0.3% 0.4% -0.3% 0.2% 0.1% -0.3%
• Share 5.3% 4.8% 3.7% 3.4% 3.3% 3.1% 2.9% 2.8% 2.6% 2.5% 2.4%
Newspapers 45,869.8 42,428.7 31,549.0 33,290.7 32,818.4 31,604.0 30,511.9 29,525.8 28,709.6 27,919.8 27,118.4
• Growth -8.9% -7.5% -25.6% 5.5% -1.4% -3.7% -3.5% -3.2% -2.8% -2.8% -2.9%
• Share 8.0% 6.7% 5.1% 4.3% 4.0% 3.6% 3.3% 3.0% 2.8% 2.6% 2.4%
Magazines 25,775.0 24,370.8 19,233.8 20,262.9 19,176.3 17,891.5 17,139.7 16,497.9 15,936.0 15,375.5 14,754.0
• Growth -7.1% -5.4% -21.1% 5.4% -5.4% -6.7% -4.2% -3.7% -3.4% -3.5% -4.0%
• Share 4.5% 3.9% 3.1% 2.6% 2.3% 2.0% 1.8% 1.7% 1.5% 1.4% 1.3%
Outdoor 35,692.1 35,769.4 26,409.3 31,724.6 31,430.5 35,631.3 39,389.3 42,361.3 44,538.0 46,446.3 48,443.5
• Growth 7.4% 0.2% -26.2% 20.1% -0.9% 13.4% 10.5% 7.5% 5.1% 4.3% 4.3%
• Share 6.2% 5.7% 4.2% 4.1% 3.8% 4.1% 4.3% 4.3% 4.3% 4.3% 4.2%
Traditional Outdoor 25,321.0 25,011.6 18,221.1 21,003.6 20,920.5 22,374.4 23,863.0 24,938.1 25,804.1 26,635.6 27,627.9
• Growth 3.6% -1.2% -27.1% 15.3% -0.4% 6.9% 6.7% 4.5% 3.5% 3.2% 3.7%
• Share 70.9% 69.9% 69.0% 66.2% 66.6% 62.8% 60.6% 58.9% 57.9% 57.3% 57.0%
Digital OOH 10,371.1 10,757.8 8,188.2 10,721.1 10,510.0 13,256.9 15,526.3 17,423.3 18,734.0 19,810.7 20,815.5
• Growth 17.8% 3.7% -23.9% 30.9% -2.0% 26.1% 17.1% 12.2% 7.5% 5.7% 5.1%
• Share 29.1% 30.1% 31.0% 33.8% 33.4% 37.2% 39.4% 41.1% 42.1% 42.7% 43.0%
Cinema 2,757.5 2,927.3 684.5 936.7 1,913.4 2,173.5 2,281.8 2,369.4 2,445.3 2,512.7 2,567.0
• Growth 18.1% 6.2% -76.6% 36.8% 104.3% 13.6% 5.0% 3.8% 3.2% 2.8% 2.2%
• Share 0.5% 0.5% 0.1% 0.1% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2%
Digital Pure-Play 274,120.3 339,013.1 385,254.2 508,685.6 555,269.9 601,683.1 648,591.7 695,790.6 744,001.1 795,804.2 849,639.9
• Growth 23.6% 23.7% 13.6% 32.0% 9.2% 8.4% 7.8% 7.3% 6.9% 7.0% 6.8%
• Share 48.0% 53.8% 61.9% 65.5% 67.2% 68.8% 70.0% 71.1% 72.2% 73% 74%
Search 102,711.8 117,947.3 126,861.7 168,023.5 185,345.2 197,538.2 211,755.2 221,879.3 235,786.5 245,952.3 260,968.0
• Growth 16.1% 14.8% 7.6% 32.4% 10.3% 6.6% 7.2% 4.8% 6.3% 4.3% 6.1%
• Share 18.0% 18.7% 20.4% 21.6% 22.4% 22.6% 22.9% 22.7% 22.9% 22.7% 22.8%
Non-Search/ Non-Retail 129,832.9 163,942.0 181,549.6 237,943.4 255,566.5 278,440.0 300,765.5 328,405.0 353,046.3 384,565.6 413,013.7
• Growth 22.3% 26.3% 10.7% 31.1% 7.4% 9.0% 8.0% 9.2% 7.5% 8.9% 7.4%
• Share 22.7% 26.0% 29.2% 30.6% 30.9% 31.8% 32.5% 33.6% 34.3% 35.4% 36.1%
Retail 41,575.7 57,123.7 76,842.9 102,718.7 114,358.2 125,704.8 136,071.0 145,506.3 155,168.3 165,286.3 175,658.2
• Growth 53.0% 37.4% 34.5% 33.7% 11.3% 9.9% 8.2% 6.9% 6.6% 6.5% 6.3%
• Share 7.3% 9.1% 12.4% 13.2% 13.8% 14.4% 14.7% 14.9% 15.1% 15.2% 15.4%
Advertising
Ex-U.S. Political
$571,387.1 $629,653.7 $622,113.5 $776,326.2 $825,855.3 $874,473.2 $926,655.2 $978,773.1 $1,030,605.2 $1,085,449.0 $1,142,685.6
• Growth 9.3% 10.2% -1.2% 24.8% 6.4% 5.9% 6.0% 5.6% 5.3% 5.3% 5.3%
U.S. Political Advertising 6,380.0 1,894.6 11,818.2 2,444.9 12,469.6 2,789.8 14,005.2 2,993.7 15,460.8 2,494.5 17,580.9
Total Advertising $577,767.1 $631,548.3 $633,931.7 $778,771.1 $838,324.9 $877,262.9 $940,660.4 $981,766.8 $1,046,066.0 $1,087,943.5 $1,160,266.4
• Growth 10.2% 9.3% 0.4% 22.8% 7.6% 4.6% 7.2% 4.4% 6.5% 4.0% 6.6%
GLOBAL SUMMARY DATA TABLE
51
JUNE 2023 • T H I S Y E A R N E X T Y E A R I G L O B A L M I D - Y E A R F O R E C A S T I GLOBAL SUMMARY DATA TABLE

PRESIDENT,
BUSINESS INTELLIGENCE
KATE SCOTT-DAWKINS
CONTACT
For inquiries, please write:
business.intelligence@groupm.com
52

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GroupM is WPP’s media investment group and the world’s leading
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media where advertising works better for people. The company is
responsible for more than $60 billion in annual media investment,
as measured by the independent research bureau COMvergence.
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53

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