This report is adapted from Glossy’s sibling publication Digiday. You can read the full report on Digiday.
Table of contents
Introduction
It’s shaping up to be a bigger and better year for ad spending in 2024. The U.S. presidential election is boosting political spending, and other key factors like retail media, social video, sports programming and streaming are adding fuel to the economy.
Major ad forecasters have predicted improved U.S. media spend totals for 2024, citing better business conditions. IPG’s Magna Global, which issues quarterly ad-spend forecasts, said in September that it expects the U.S. ad market to total $377 billion this year, an improvement of 11.4% year over year. Forrester’s 2024 forecast cited 6.6% growth this year to $357.3 billion.
On a worldwide scale, GroupM expects global ad spending to grow 7.8% in 2024 to $989.8 billion, excluding political advertising — a notable bump from its original 5.3% growth forecast.
The agencies Glossy surveyed for this media agency report said they’re seeing positive spending among their clients, reinforcing these predictions. More than one-third of agency respondents (36%) said clients increased budgets this year. That’s despite sticky inflation and high borrowing costs putting a damper on consumer spending for at least the first half of the year.
When it comes to growth within specific media channels, retail media has surged in popularity over the last year, becoming a full-funnel play for many agencies and their clients. At this point, there are more than 200 retail media networks, according to Mimbi, a retail media intelligence platform, and companies seem determined to turn every digital surface into an ad opportunity.
Bearing all of this in mind, Glossy’s 2024 media agency report examines the current and future state of media agencies from the perspective of total client spending and spending by media channel. It also delves into the impact of retail media on the agency landscape.
Methodology
To assess the current state of media planning and buying and to understand which channels clients are investing in now and where they will be spending in the future, Glossy+ Research collected responses from 48 agency professionals in a survey fielded in July/August 2024.
For additional industry insight, Glossy hosted a focus group of eight senior media agency executives who oversee media investment at holding company-owned and independent media agencies to gather first-person accounts of client spending. Agencies and networks that participated in the focus group were:
- Assembly Global
- Horizon Media
- Magna Global
- Mediahub
- Novus
- PMG
- Publicis Media
- UM
Spending set to accelerate in digital channels in 2025
One thing agencies are clear on is that digital channels will be the big winners when it comes to where clients up their spending in 2025. Among all of the media channels included in Glossy’s survey, agencies selected social media (90% of respondents), retail media (50% of respondents) and streaming video and CTV (45% of respondents) as the top three channels in which they expect to see increased client spending next year.
One reason for the shift to digital channels, like social media, retail media and streaming video and CTV, is that they tend to be less expensive than traditional channels. “Budgets are continuously shifting into more digital and platform-oriented spaces that are inherently cheaper,” said Allie Kallish, evp, strategic investment and marketplace strategy at Magna Global. “They don’t cost as much money to get the same reach.”
Digital channels are also relatively easier to move money out of, and to otherwise reconfigure, than other channels. Linear TV ads, for example, are generally bought months in advance during the upfront buying cycle, making them less flexible.
Within media channels, social media is the No. 1 channel in which survey respondents said they expect to see increased client spending next year. Ninety percent of respondents said they expect clients to increase their social media spend in 2025. Meanwhile, an almost identical percentage of agency respondents (88%) said clients have increased their social media ad spend in 2024.
Social media remains the most popular marketing channel among agency clients due to its massive audience reach and the opportunity it affords to establish genuine, organic connections with consumers. To note, social media also had the highest marketer usage among media channels studied in Glossy’s recent CMO Strategies series, for the second year in a row.
During our focus group discussion, agency executives told Glossy they’ve seen clients shift spending, in particular, into short-form video on social media. “The investment in short-form content, specifically within TikTok and Meta’s Reels product, is where we’re seeing investments climb,” PMG’s Geldert said.
A main reason clients are investing in short-form video is to reach younger audiences where they are most active, according to focus group executives. “A lot of clients that are going after younger consumers are definitely going to lean in there,” said Marcy Greenberger, evp and managing partner at UM. “Also, short-from video sometimes gives [a client], depending on who the publisher is, an opportunity to be a little bit more contextually relevant, versus a linear CTV that’s very either broad entertainment or sports.”
Among social media platforms, TikTok and Meta’s Reels rely almost exclusively on short-form video content. Consumer use of TikTok, in particular, is especially prevalent among younger adults. Fifty-six percent of all U.S. adults ages 18 to 34 say they use the platform, according to the Pew Research Center.
Shelby Saville, chief investment officer of Publicis Media, said that TikTok’s younger audience reach, plus viewers’ need to watch videos with the sound turned on, has increased clients’ interest in short-form social media video advertising. “It [TikTok] re-trained younger consumers to have sound on for short-form in social,” Saville said. “That has made advertisers more interested in social short-form video, when all of a sudden there’s a lot of sound-on consumption happening,” Saville said.
“It’s an interesting phenomenon,” Saville added. “Five or six years ago, [a client] would have had to caption [a] video, and do multiple other things on social short-form. That’s just not the case anymore. TikTok brought sound-on back into things. … The sound-on is having an impact.”
Social media advertising also offers advertisers the opportunity to connect organically with audiences. Audience relationships are highly valued by advertisers on social media, where engagement is the main success metric they consider on all social platforms, with the exception of Pinterest. This is according to Glossy’s CMO Strategies series.
David Campanelli, chief investment officer at Horizon Media, said clients need to meet audiences where they’re at when planning their social media budgets. “You have to go where people are consuming content, and particularly if you want to reach younger people,” Campanelli said. “The argument of … is short-form as good as long-form? Is it professionally produced? We still have to acknowledge the differences, but you have to be where people are spending time, and you have to move where the viewers are.”
How retail media’s rise affects client investments
After No. 1 social media, retail media came in second place as the media channel in which agencies most expect clients to increase their budgets in 2025. Exactly half of respondents to Glossy’s survey (50%) said clients will increase retail media spending in 2025. And exactly half of agencies (50%) said their clients have increased their retail media spending in 2024.
Over the last year, retail media has surged in popularity, and ad revenue projections for the media channel have grown in lockstep. Group M reported that the global retail media ad market was expected to end 2023 with an estimated $119.4 billion in revenue. GroupM’s 2024 mid-year media channel forecast predicted that retail media will grow 17.5% this year and 13.5% in 2025.
Similarly, eMarketer has predicted that retail media will account for one-fifth of worldwide digital ad spending in 2024, with global retail media ad spending hitting $140 billion in 2024. EMarketer forecasts that U.S. retail media ad spending will rise 26% to $54.28 billion in 2024 and reach $128.87 billion by 2028.
Therefore, it comes as no surprise that the majority of agencies are advising their clients to invest in retail media. Sixty-three percent of survey respondents said they are currently advising their clients to invest in retail media, while only 37% of respondents said that they aren’t advising clients to invest in retail media.
The top reason agencies are recommending that clients invest in retail media is to raise consumer awareness of a product or brand. Just under half of agencies (48%) told Glossy that they advise their clients to invest in retail media for this reason.
Global e-commerce giant Amazon is a prime example of a retail media network (RMN) that is often used to raise brand awareness, in addition to converting sales. Many consumers use the dominant RMN Amazon as a place to research products before making a purchase. As consumers spend more time browsing products on Amazon.com, agencies and their clients are recognizing the potential of Amazon and other RMNs for brand storytelling and awareness, whether or not they sell on the platforms themselves.
“Anybody that sells on Amazon, or some of the larger retailers, definitely sees a value in that — not only because it drives direct sales, but it also helps with their customer relationships,” said UM’s Greenberger. “It’s often a key part of their sales and merchandising plans to commit a certain amount through their retail media networks.”
The second-most important reason agencies said they advise their clients to invest in retail media is as a first-party data source. Slightly more than one-third of respondents (34%) said they advise clients to invest in the channel for this reason.
Retail media has an edge over other channels when it comes to its access to customer purchase data through sites that are built for commerce. With data privacy laws becoming stricter, access to networks with customer purchase data are attractive to advertisers hoping target specific audiences. Additionally, the uncertainty around Google’s plans related to third-party cookies in Chrome has driven marketers to look at alternate data sources.
Nearly another one-third of respondents (31%) said that they recommend their clients invest in retail media to supplement campaigns first launched through other media channels. This reflects retail media’s original positioning as a lower-funnel, performance-driven marketing tactic, focused on converting sales. And, indeed, many agency clients use retail media in that capacity.
However, as media agencies have learned the ins and outs of retail media, they’re also starting to understand its value as a full-funnel marketing channel. RMNs are encouraging this type of thinking as well, as they connect to a broader array of data sources, according to Jon Flugstad, head of business development, commerce media, at machine learning company Moloco.
“The idea of being full-funnel is on a lot of minds of retail media networks,” Flugstad said. “This idea that I have the channels in my purview that can achieve a broad swath of objectives for my advertisers. It’s not just about performance anymore. A brand might think of optimizing for reach for certain campaigns, or optimizing for other kinds of elements that are part of a tentpole event, for example. Am I launching a product? Is it back to school? So how do I meet their needs in a way as a full media offering.”
The RMNs are even taking their messages straight to the media agency world and encouraging them to include clients who wouldn’t necessarily advertise on RMNs in their media buys. “We’ve definitely been pitched from a few of them [RMNs] about the non-endemic [clients] and it’s interesting to a degree because there could be some value in understanding purchase behavior and using that to target regardless of whether you’re driving a direct sale within the retailer,” UM’s Greenberger said.
However, Greenberger added that costs are still too high for RMNs to make sense for most non-endemic clients. “There needs to be a slightly different model because … you’re paying a premium to use the targeting, but oftentimes they’re including closed-loop measurement and, if you’re not selling on the retailer platform, that’s not a value to you,” she said. “The price point needs to be a different model for monetization in order to attract the non-endemics.”
Horizon Media’s Campanelli agreed. “It’s hard enough to justify the data premiums in the retail space for endemic advertisers. Doing it with non-endemic [advertisers] is even harder, or impossible,” he said.
Lack of budget and too many RMN investment options is the top challenge agencies say they face within retail media. More than one-third of survey respondents (36%) said this. Although Amazon, Walmart’s Walmart Connect and Target’s Roundel continue to dominate retail media, in the past year, a plethora of new retail media platforms have popped up from specialty retailers like luxury department store chain Saks Fifth Avenue, travel company Expedia and national bank JPMorgan Chase.
Some experts have said that the boom in retail media options is not sustainable and harms all parties, further supporting the top challenge identified in Glossy’s survey. “There’s not enough money to go around for this to be sustainable,” said Ethan Goodman, evp of digital commerce at The Mars Agency. “Once you get past a certain point, the offerings start to blur together and the question becomes, ‘Why don’t I just invest in the [major players, like Amazon, Walmart, Target and Kroger].’”
Cost of media is the second-largest challenge agencies said they face within retail media — a common concern across media channels. While cost is often associated with budget, for agencies and their clients working within retail media, the two challenges can be viewed separately. Retail media budget concerns are unique in that the challenge they face likely stems from the rapid growth of RMNs. As new platforms are introduced, clients have had to stretch their budgets in order to balance their platform mix.
Publicis Media’s Saville reiterated that data premiums can add to agencies’ and clients’ media cost concerns too, especially when it comes to off-site retail media advertising. “Off-platform is where that data premium really comes in. [RMNs] are all trying to expand their business, looking further out to say there is a limited silo of things that we’ll do on platform. All of it just needs to have a lot more proof points and be crafted in a way that makes sense for broader categories,” Saville said. “But they seem challenged to figure out the long-term future, to scale what they have beyond the natural places that are shopper [marketing] moving over and some media moving in.”
Key findings
- Digital channels will be the big winners when it comes to where clients increase their spending in 2025. Agencies selected social media (90% of respondents), retail media (50% of respondents) and streaming video and CTV (45% of respondents) as the top three channels in which they expect to see increased client spending next year.
- Within social media, agency clients are shifting spending into short-form video in particular. Short-form video offers the opportunity to reach younger audiences where they are most active. Viewers’ need to watch short-form videos with the sound turned on has also increased clients’ interest in short-form video advertising.
- The majority of agencies (63%) said they are currently advising their clients to invest in retail media. Raising consumer awareness of a product or brand is the top reason agencies said they recommend that clients invest in retail media. Forty-eight percent of agencies said this.
- Lack of budget and too many investment options is the top challenge agencies say they face within retail media — 36% of respondents said this. As retail media has surged in popularity, a plethora of new RMNs have popped up, forcing clients to stretch their budgets in order to balance their platform mix.
