U.S. advertising market poised for deceleration in H2 2024 – Madison and Wall

According to a report by the well-respected analyst firm Madison and Wall, the U.S. advertising industry saw a strong 9.6% growth in Q2 2024, marking the third straight quarter of nearly 10% expansion. According to the firm’s latest report, total U.S. advertising spend is expected to reach $397 billion by the end of 2024, with $16 billion of that attributed to political and issue advertising. Despite these impressive figures, the report warns that the second half of the year may see a slowdown due to higher growth rates recorded in late 2023.

Madison and Wall’s Brian Wieser emphasized that while the advertising market is currently “healthy and maybe unsustainably strong,” the industry should prepare for a return to more typical growth rates in the near future. The report notes that digital advertising, which grew by 16.4% in Q2 2024, will likely experience a slowdown as well. This is attributed to potential deceleration in retail media networks and other factors such as the cooling demand from Chinese cross-border advertising.

The digital ad space, which accounted for nearly two-thirds of the industry’s revenue last quarter, continues to be a dominant force. However, Wieser pointed out that traditional media owners, particularly those relying on the open web, face a more challenging environment. Concerns over cookie depreciation, brand safety, and the lack of industry standards like GARM have left open-web publishers at the bottom of the digital advertising barrel, with an even slower predicted growth rate of 3.1%.

The report also highlights the unique factors influencing the market this year, including the modest impact of the Olympic Games on national TV ad spending. While there was a slight bump in Q3 2024, Wieser cautioned that such growth is unlikely to be sustained, as marketers often reallocate their conventional media budgets to fund Olympic ad campaigns, which flattens the overall impact.

Looking ahead, political advertising is expected to play a significant role, though not to the extent seen in previous election cycles. Wieser notes that the growth in political ad spending in 2024 will be modest compared to the surge witnessed in 2020, with only a 14% increase anticipated. The report suggests that while political advertising will continue to contribute to overall ad spend, it won’t be enough to offset the broader deceleration expected in the industry.