July 25, 2024

Skyrocketing Digital Ad Spend in Nielsen’s 2023 Annual Marketing Report Highlights CMOs’ Challenges in Resource Allocation

Nielsen CEO David Kenny (Image credit: Paul Miller/Bloomberg via Getty Images)
Nielsen CEO David Kenny (Image credit: Paul Miller/Bloomberg via Getty Images)

Nielsen Corporation, a global marketing research firm, has released its 2023 Annual Marketing Report, unveiling the mounting complexity faced by Chief Marketing Officers (CMOs) in delivering results and justifying marketing investments amid an ever-changing landscape. The report emphasizes the need for CMOs to navigate these complexities by making well-informed decisions about resource allocation and spending to achieve the best outcomes for their businesses.

The growth of smart TVs and streaming channels offers brands new opportunities to engage audiences, leading to increased spending across all digital channels. The report reveals that 84% of global marketers now include streaming channels in their media plans, while 71% recognize the importance of comparable measurement across channels. However, marketers express relatively low confidence in channel effectiveness and their ability to measure ROI across channels.

Despite economic uncertainty, 64% of marketers anticipate an increase in their annual budgets this year. Confidence in measuring ROI at the channel level averages 54%, providing limited insight into the full return on their spending. The report also discloses that the use of multiple measurement tools contributes to marketers’ low confidence in obtaining a single, consistent view of audience performance across devices and platforms.

Notable industry forecasts project mid-single-digit ad spend growth this year, predominantly attributed to connected TV (CTV) and streaming. The Interactive Advertising Bureau (IAB) expects increased ad spend across all digital channels and a decline in spending across traditional channels like TV and radio.

In the U.S., digital video ad spend during the first three quarters of 2022 reached $14.6 billion, a 171% increase from the $5.4 billion spent in 2020. Digital ad spend across Puerto Rico, Mexico, and Brazil surged by 228% between 2021 and 2022, with total spending in these markets amounting to $24.5 billion last year, 58% of which was allocated to digital video. In France, Denmark, and the U.K., internet-based video spend increased from $2.3 billion in the first three quarters of 2020 to $4.2 billion in 2022.

The shift to streaming is apparent in various markets globally, emphasizing the need for accurate measurement. Marketing and advertising agency Zenith forecasts global online video ad spending to grow at a compound annual growth rate (CAGR) of 4.8% through 2025, accounting for 30% of the overall ad market. Advertising on subscription video on demand (SVOD) services is predicted to grow at a CAGR of 27.9%, reaching $13.1 billion by 2025.

As CMOs grapple with complex challenges in a rapidly changing media environment, the key to success lies in focusing on customer needs, testing new channels, learning when and where to pivot, and embracing new capabilities.

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