← Behind the Numbers: an EMARKETER Podcast
Behind the Numbers: an EMARKETER Podcast
Advertisers Continue to Brace for Impact: How Market Pressures Are Reshaping Ad Spending Milestones This Year and Next | Behind the Numbers
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- [00:00]
A
Take your brand to new heights with in flight advertising powered by Viasat ads. High engagement formats, targeted delivery and self service tracking. Make it simple, reach millions of travelers across leading airlines in a premium captive environment. Join their journey with viasat ads. Hey gang, it's Monday, December 1st. Yuri, Oscar and listeners, welcome to behind the numbers new market video podcast made possible by viasat ads. I'm Marcus and joining me for today's conversation we have principal analyst heads up our media, tech and advertising teams living in New Jersey, it's Yuri Wormser.
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B
Hey Marcus, how are you doing?
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A
Hey fellow. Very good. Good to have you on the show. We're also joined by senior director of forecasting spending life in New York, it's Oscar Orozco listeners.
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C
Hey Marcus, glad to be back. It's been been a while.
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A
Welcome back. Yeah, three month ban and he, he's back on the show.
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C
It was the Z fact. I earned that one.
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A
Always is. Today's fact is the moon is drifting away from earth at about not. It's not run, it's not sprinting away. Let's be real, it's about an inch and a half or four centimeters per year. And as a result total eclipses, Total solar eclipses will eventually cease to occur. Now don't worry, it will be a while. It's about 600 million years this will take place the the moon will eventually be appear too small in the sky to completely block out the sun. Which means no more total eclipses. Instead, much cooler in my opinion. We'll get an annular, basically a ring of fire eclipse.
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C
What is that?
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A
That's way better.
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C
What is that exactly? How does that look?
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A
So it's basically the, the moon's gonna be like. So it's basically the moon will fill out the middle of the sun and so there'll be like the sun will show around the moon.
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C
Got it.
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A
And it'll look like a ring of fire.
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B
Yeah. It'll look like a burning ring.
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A
Yes.
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C
Incredible.
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A
Can't wait for that. Will I be here still?
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C
Probably never know.
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A
Still doing the show.
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C
I'm not sure if the moon and the earth still be here then but you know, what is it? 600 million years? Yeah. Not sure.
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A
Yeah, yeah. Don't worry about any of this. We won't be able to see it. That's bleak. All right. Anyway, today's real topic is ad spending. Much more uplifting. So unless you are playing the stock market, economic conditions still look pretty precarious. As Wall Street Journal notes, the University of Michigan's consumer sentiment index fell to just above record low levels, the one seen amidst the historic inflation that hits, if you guys remember, in 2022, that summer of 9% inflation and also the lows in terms of consumer sentiment witnessed in spring this year after President Trump first rolled out steep new global tariffs. Former behind the Numbers guest and special guest, I should say. And University of Michigan survey director Joanne Su explains that quote with the federal government shutdown dragging on for over a month, consumers are now expressing worries about potential negative consequences for the economy. Close quote. So Oscar, we're checking in on advertisers. How are they faring amidst the current economic backdrop of tariffs, inflation and the government shutdown we just came off of?
- [03:39]
C
Yeah, I mean it's a great question. I mean so much negativity in the air. But you know, the reality, what we're seeing so far is really the word resilience keeps coming up and we've used it a lot throughout the year. The ad market has held up pretty well and with both Google and Meta we know how much their performance weighs on the market. Their Q3 revenues came in higher than analysts expectations. We anticipate an even slightly modest upgrade in our December update to our ad spending forecasts here at em. So overall it's held up pretty well been resilience. There have been brief periods of uncertainty and positive in spending and campaigns being delayed. But ultimately it's all come back to being just sort of a healthy year with what seems to be revisions every quarter when we update our own estimates here at the company.
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A
So I was going to ask, you said that there'd probably be some revisions upwards. There were some revisions downwards earlier this year from us. Correct?
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C
There were, there were, there was a Q2 downgrade where we we expected the market to grow at single digits, very high single digit digits. I believe it was about 9.5% growth. But you know, our Q3 update was we, we revised upwards about almost 2 percentage points and the expectation is we, you know, again a slightly modest uptick here when we work on our when we publish our estimates in just a few weeks time.
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A
Yeah, it's hard to figure out. I mean an upward revision sounds like things are improving, a down revision sounds like things aren't going so well. But if it's a down revision from a pretty strong number, maybe it's not so bad. The IAB Yuri lowered their 2025 US ad spend forecast from 7.3% growth to 5.7%, citing macroeconomic pressures and tariffs as well. What's your take on how advertisers are faring at the moment.
- [05:39]
B
I mean, like Oscar advertisers. My view is that advertising in general has been amazingly resilient. I mean, you're seeing that both in the total advertising numbers that we have, which is a little higher than IABs at 7%, 7.0% growth for all advertising spend. And for digital, I think it's around 11.5% or 11.4%. And you know, going back to when the tariffs hit, our best case scenario I think was below 11.4%. So, you know, it, it's, the economy is, is still suffering from tariffs. I think we're going to see some, you know, we saw imports go down in October. We, we are probably going to see some mild inflation as a result of the tariffs. But nonetheless, ad spending keeps on, you know, at least in digital in the double digits, which is really impressive.
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C
Yeah. And I would mention a quick note, the revision in Q2, which is always the case, but it was given what was happening with tariffs at that time. So there was a little bit of an element of sort of guessing how this would all work out. We saw some campaigns being pushed earlier, imports being accelerated, and this all because of the expectation that we would see a much weaker summer. And that wasn't necessarily the case. So I do think we need to start thinking about 2026. However, as Yuri was alluding to here, there's still a lot of uncertainty there. So something that we're keeping an eye on here.
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A
Yeah. What we expecting for 2026 in terms of total ad spend? Is it going to be slightly lower than this year? Slightly higher on par?
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C
Yeah. So the numbers, we're not expecting any sort of inflection point spike in growth. I mean, it's a linear sort of story from 2025. But you know, the expectation for now from our Q3 estimates is, is still slightly double, you know, double digit growth, low double digit growth. And you know, we'll, we'll, we're reassessing now here in the month of December, but that still seems to be the case because again, everything that we saw through the spring, early summer ended up just, you know, not having as much of an impact on the ad market as we initially expected. And, and so we expect the same resilience really next year.
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A
Yeah.
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B
And you know, our forecast goes out to 2029 and each year we're expecting a slightly lower growth rate for digital in large measure because there's just not that much more traditional advertising to poach. Digital advertising is already over 80% of total advertising spend. So, you know, that number for traditional get smaller. There's just less incremental dollars for Digital.
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A
Yeah. At 80% and growing, we're expecting close to 90% by the end of our forecast in terms of digital share of the total ad spend. Pie. Yeah, it's hard to tell. There are concerns that the economy is being propped up artificially with a lot of AI investment. And if you're Ms. Sue from the Michigan Consumer Survey was saying that strong stock returns have helped keep sentiment afloat for people with big investment portfolios. And we've seen that year to date, the dow is up 8%, the S&P up 11% since the start of 2024. The Dow is up 20, the S&P up 40. And so that has made things look a lot better. However, high prices still hurting, folks. Matt Grossman and Sam Goldfarb of the Journal noting that inflation has dropped from, from the highs that it reached three years ago, but at 3% in September, it's now remained elevated above the 2% target for almost half a decade. And so that is still hurting.
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C
Yeah, we're definitely seeing some signs there. A bear market. Is that what we're going to see in early 2026? I mean, we're seeing from the consumer side. Right. You talked about inflation, but even sort of a hiring slowdown, how is that going to ultimately impact consumers, which. Which we know here the US Economy is driven so much by consumer spending. So there are definitely some worrying signs and, you know, but we'll see how that starts to shake out, especially in Q1. I do expect Q4 to still show some strength and, and, you know, well, time will tell, but that seems to be what the course is.
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A
Yeah, digital such a huge part of the total pie that it is a bellwether. You know, digital goes as the total ad industry goes. And similarly, you know, the triopoly or the digital ad market goes the way of the triopoly because they are also such a significant piece of that. This year, we estimate that the trio, Poly, Google, Meta and Amazon will account for 61.7, to be specific, percent of total US digital ad dollars. That's up a touch from last year's 61% percent. Yuri, what's your take on how the tropoly is faring and changing at the moment?
- [10:56]
B
They're doing incredibly well, all three of them. So when you look at Meta's ad growth and Amazon's ad growth, ad spend, ad revenue growth, they're both well above the mean for, for digital advertising. Overall, I think Meta is at 17.7% and Amazon is at 18%. The exception is Google, which we're projecting, I believe around 5.7% growth this year for their ad growth. That doesn't mean they're doing badly. I think they're actually doing quite well. They're growing, you know, 5.7%. Search as a, as a format is just not growing. It's a more mature format. It's not growing as quickly as displaying. There's always, you know, the, the grill in the room with search, which is AI and how much that's starting to affect ad spending, growth in search. So Google's got its work cut out for. But you know, with Gemini's release, Gemini 3's release a couple weeks ago, very strong numbers in their Q3 earnings, they may not be growing as quickly in ad spend as the other two, but as a company, I think they're doing incredibly well right now.
- [12:14]
A
Yeah, they're not growing as fast as the others. And that leads me to the second point I want to make here. I want to make two really quickly. The first is Meta is doing well and it's interesting because if you scratch below the surface, we estimate that Instagram now making more money in terms of advertising for Meta than Facebook. So I think that's a big part of the story is how well Instagram is doing to help Meta get to where it is. And then secondly, this, this jumped out to me, Oscar and I know we're talking about this year and 2026, but I want to talk about 2027 for a second because in our, according to our forecast, Meta will make more money from advertising than Google. We're going to revise those numbers. But by 2027, we at the moment have Meta marginally taking the top spot from Google, which I thought was really interesting. And that speaks to that growth of Meta versus a slower growth of Google.
- [13:04]
C
Yeah, I mean that's, that's quietly been and you know, sort of stealing the thunder a little bit there. But we're, it's going to be one now. It's abso. But one of our big headlines exactly how in two years time we, we expect Meta to be above Google, which is huge news. Right. I would also to speak a little bit to Yuri's point in Google, I mean, I want to shout out YouTube. I mean YouTube has also been a standout growth engine for them. A lot of success from shorts as well and from the engagement piece to now the monetization piece. So, you know, it's, it's you know, Google is still in, in strong position but to round out the triopoly, I mean Amazon, right. It's hard not to talk about Amazon's ad business. They are out of the three gaining the fastest share of the market. There's just so much success with their off site advertising by their DSP which has been a huge driver and you know, kind of going back to the YouTube story, the prime video for them, the ads being scaled there and what that means for CTV as well. So yes, the three are doing well, taking slightly more share of the market. It's only a few tenths of a percentage but it's so meaningful because we're talking about billions of dollars so.
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A
Yeah, yeah, yeah, absolutely. Amazon has firmly established itself as a deserving member of the triopoly. Not the little brother anymore. In third place as we mentioned, Google Meta for now at least Google Meta and then Amazon. Amazon by itself still accounts for as many ad dollars, digital ad dollars as fourth place, fifth, sixth, seventh, eighth, ninth and 10th combined. So that's the gap between third and the rest of the pack. Let's gents turn attention to this year and then to next year. My first question focusing on 2025, Yuri for you, what has been the biggest ad spending milestone slash standout number or moment this year?
- [15:13]
B
You kind of stole my thunder because I stole my thunder on the first one, which I know. So the first number I was thinking is that digital is going to pass 80% of total advertising, which I just, I think that's just a, you know, a stunning number because I, I think it was just in Oscar, correct me, but I think it was around 2019 where it became the majority.
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C
That's about right.
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B
Yeah, but it's, it, it's been just tremendous growth for digital advertising over the last few years and it's just going to continue upwards towards 90% by the end of our forecast period. So that's one. And the second one is the one you mentioned which is Instagram passing Facebook as you know, the leading generator of ad revenue for Meta. Again, something you couldn't have foreseen a few years ago.
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A
No, yeah, 55%. You're spot on. It's about half in 2019 and then six years later, 82% to be specific and climbing Oscar, how about for you?
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C
Yeah, mine is less a particular number, forecast milestone from that angle. I mean I wanted to talk a little bit more and I just kind of hinted at it with the prime about prime video story and YouTube but it's CTV, it's difficult not to talk about CTV, how dynamic it's become because of all the moving parts, all of the emerging platforms. Right. The ad tiered product in the SVOD space we have YouTube, the emergence of fast channels. So so much more inventory there. It feels like 2025 has been a banner year for CTV and we have continued to revise our numbers. We had have growth at 14% roughly for 2025 and there are again just so many moving parts there. Integrations and partnerships with retail media platforms. Amazon mainly. So yeah, to me it has to be ctv. It's just such an interesting channel.
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A
And I'm glad you you brought that up because one of the things that I've written down that stood out to me about this year after going through the numbers and looking at the rankings of digital ad players was that Roku has cracked the top eight digital ad players, which is a huge deal because the top eight rarely if ever changed. The top six haven't changed in years. Google, Meta, Amazon, TikTok, Microsoft, Apple, Walmart just took the number seven spot last year from Hulu and now Roku has nestled itself in at number eight which I thought was interesting.
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C
Yeah, I mean they launched maybe Roku viewers have seen this howdy platform launch that you can't seem to get rid of the app if you don't want to use it. But yeah, there's a sign of of healthy growth there when their acquisitions Friendly TV was a recent one and, and just the, the fact that there seems to be more advertiser interest for Roku, especially SMBs. So that's always a good sign.
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B
Yeah, right. They might lose that spot though next year. Right. Because Disney's merging with Disney plus and Hulu are coming. So Disney will probably jump back above. But that's not a sign of anything going wrong with Roku. It's just a combination.
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A
Yeah, good point. That's a good point. 20:26 Yuri, what you think is going to stand out the most next year?
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B
I'm going to cheat a little bit and talk about 2027. What I think is a huge turning point. I know, I know. And that's it. It's a trend that's going to be huge next year. It's just that social video is growing much quicker than the combination TV and TV.
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C
It's a good one. It's a great one year continues.
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B
By 2027 social video is actually going to get get it be larger than a combination of CTV and TV which is growing not that quickly when you, when you look at them As a combination.
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A
Wow, that is a good one. Sorry Oscar, should we just skip you?
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C
No, no, please don't. I have so much to say. I mean just in the, in the same sphere there, I mean it's for 2026 that to me the biggest milestone now I am going to specifically talk about a data point. It's that, you know, three out of ten digital dollars will go to social. So again, yeah, driven entire, you know, almost entirely by the video piece. But it's absolutely, yeah, it's, it's interesting to consider because we've predicted stagnation at times and sort of like loss of momentum and you know, social just losing prominence, but it just continues to not be the case. It's defying logic strength from of course videos driving it. But you know, platforms like Reddit, sort of slight rebound from X as well, seems to be doing a bit better on the ad side. And TikTok of course, so the heightened competition and the use of AI perform to drive performance. So many things going on there that for me it's social next year. Yep.
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B
Yeah, yeah, and, and, and you know, it's the last one. I think you said the AI because Meta still is by far the largest of the social platforms and they're just having great results from their AI optimization platforms and that's really driving a ton of their growth. Not just the fact that they're adding video inventory, they're just getting a lot more power out of their existing inventory through AI.
- [20:38]
C
Yeah, and I was one last thing, I need to shamelessly call out a forecast that I've just completed, but it's on social commerce. So just also the commerce piece and how that's playing into their bottom lines is something to watch out for and also helping, you know, on the ad side as well. And just overall strength for the social platforms.
- [21:01]
A
Yeah, Danny, we'll cut that. We can't have Oscar using this as a self promotional tool. Right. It's not the platform. Two things for me really quickly though. I was looking at the numbers for next year and the two things that stood out. One, TV ad spending is going through. Step change declines. A lot of the time we see down and to the right declines when something is going away. But because of World Cups, because of Olympics, Olympics Olympia, because of elections, it's not going to be. It's been kind of in the 60 to 70 billion range in terms of TV ad dollars forever, every single year. And then it went this year it's been a step change down from about 59 billion to 52 but then next year it will kind of hold fast around 50 because of those major events. And then there'll be another step change down whenever there's basically an odd numbered year. And then it will maintain that water level on an even numbered year. So I thought it was interesting way for TV to be declining. And then the second one here was Reddit will double ad revenue. I think it's one of your forecast stories actually, Oscar. You guys put out with double ad revenue from 2024 to 2026. It's small, but that means that it's going from the 22nd largest digital ad player to the 15th in the US overtaking it's some big names. Instacart, Tubi, Pluto, Yelp, Pandora, X, Twitter and Spotify. Overtaking those guys in terms of 2026 US ad dollars.
- [22:29]
C
Yeah, I mean it's definitely smaller, you know, under a billion just, you know, a year or two ago. But nonetheless, yeah, as you mentioned, it's not easy to climb over some of these, you know, huge competitors that have been so successful for a long time. Reddit is absolutely a success story.
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B
They're just getting started with things like AI and search advertising. So they've got a lot of to grow.
- [22:49]
A
Yep, gents, great points all around and unfortunately all we have time for. But thank you so much for joining me for today. Thank you. First to Yuri.
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B
Great to be here.
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A
Yes, sir. And of course to Oscar.
- [22:58]
C
Thanks, Marcus. Thanks for having me back.
- [23:00]
A
Yes, welcome back my friends. And thank you so much to the production crew and to everyone for listening into behind the Numbers in the marketing video podcast made possible by viasat ads. Make sure you subscribe and follow and leave a rating and review if you can. We really, really appreciate those. We have a special edition episode tomorrow Tuesday with content from our CTV and streaming advertising trends for 2026 summit panel. It's on AI's impact on streaming's ad creative. So there's that episode. Tomorrow Wednesday we'll have Susie will be speaking about what Amazon is going to do about grocery on the Reimagining retail show. And I hope to see you on Friday for more behind the Numbers.