What's driving the rosy outlook for the U.S. ad industry this year?

Ad industry observers who were already bullish this year are seeming even more optimistic lately.

Several forecasters have recently increased their U.S. projections for ad revenue for the year, suggesting rosy outlooks for an improved economy ahead of the presidential election season and this summer’s Olympic Games. These two major events are overlapping at a critical moment for opportunities in ad tech, as digital advertising makes gains, thanks to connected TV (CTV), retail media, political spending and more.

The improved forecasts include Madison and Wall analyst Brian Wieser, who’s anticipating 5.6% growth in ad revenue this year, up from a prior forecast of 5.2% annual growth; and last week, Magna said it expects ad sales from media owners to increase by 9.2% this year, up from a previous projection of 8.4%.

Earlier this year, eMarketer analyst Ethan Cramer-Flood wrote, “After two years of uncertainty, the worldwide ad market has stabilized, and spending is set to accelerate. Digital advertising is looking particularly healthy…”

eMarketer expected growth for both traditional and digital ad spending. It projected that the latter would grow by 13.2% this year and total worldwide ad spend would increase 9.7%.

Hanna Kahlert, a cultural trends analyst at Midia Research, tells The Current that the U.S. election cycle could make “reliable, curated partners such as networks, streaming platforms and the like more desirable” for advertisers compared to social platforms if they wish to avoid unpredictable placements next to political content.

It’s not just political or sports driving this expected growth. Digital channels like CTV and retail media have not only been steadily surging as essential parts of advertisers’ budgets, but also converging as retail media networks and CTV players increasingly strike partnerships that benefit both parties. eMarketer has projected that retail media CTV ad spend could grow to approximately $3.6 billion this year, more than double a previous estimate.

The Current has been covering these driving factors and shifts in the ad industry. Below is more on what is contributing to the rosy outlook this year, particularly for digital ad spend.

Live sports’ shift to streaming

In general, premium streaming platforms have leaned heavily into building advertising businesses, from Netflix to Disney+.

“This means new channels to deliver ads to audiences, with strong content-associated targeting  — one of the ways advertisers will likely cope with a reduction of third-party cookie usability,” says Kahlert, the Midia Research analyst.

While Magna does expect ad spending on entertainment to slow this year amid a potential reduction in content, live sports — typically a boon for advertisers — are becoming the linchpin of streaming strategies for entertainment companies. The Olympics will put that on full display.

For instance, last month, NBCUniversal (NBCU) announced that advertisers will be able to bid programmatically on the Olympic Games for the first time as they stream on Peacock.

“This is going to open up the ability for small- and medium-sized agencies and advertisers to access the Olympics,” Ryan McConville, EVP of ad platforms and operations at NBCU, previously told The Current. “They’ve just never been able to do that before.” 

During The Trade Desk’s Forward ’24 event in February on the state of CTV, John Alleva, EVP of platform monetization at NBCU, said that the company had “more than doubled the amount of advertisers in our programmatic live events.”

“And so we want to continue that, because we get to diversify the client base then,” he added. “It’s not only a better consumer product but also better for our clients.”

Peacock will also be home to an exclusive NFL regular-season game this season after the success of its exclusive playoff game earlier this year. NBCU said the Peacock playoff game was watched by 23 million viewers, the most-streamed live event of all time. Subscriptions analytics firm Antenna said that it attracted 3 million new signups, 71% of which are still subscribed.

Needless to say, sports and streaming are likely to continue to overlap, which could drive digital ad growth. Warner Bros. Discovery, Fox and Disney’s ESPN are planning to launch a joint streaming platform dedicated to sports later this year and ESPN intends to launch a stand-alone service next year for all its own programming.

Political going digital

Digital platforms are likely going to be a major part of political ad spending this U.S. election season.

A December eMarketer report projected that digital political ad spending would jump 156% from the last presidential election in 2020. It predicted overall political spending to increase by 30%.

The Current previously reported that CTV could be a big driving factor in the jump for political on digital platforms. A report by The Trade Desk Intelligence and Morning Consult found increased time spent on CTV compared to traditional TV in 2022 in battleground states. The report suggested that respondents with heavy streaming consumption were also more likely to vote.

Tom Pino, CEO of Polaris Strategies, previously told The Current, “If you want to talk to younger voters, if you need incremental reach, digital CTV is absolutely critical.”

The Current is owned and operated by The Trade Desk Inc.