The State of Digital Advertising: Trends that will Shape 2024

As we look ahead to 2024, the digital landscape will undergo transformative changes that influence how brands reach and connect with customers. Despite economic anxieties in 2023, global advertising continues to rise while digital steadily increases its annual share.

Exciting times, to be sure, but the environment will be more crowded and noisy than ever, as the US enters into an election year that will see political ad spending break records.

Increased platform competition combines with contraction in Hollywood. Even with the emergence of CTV, brands will prioritize online platforms because of sharp reductions in linear television and reduced premium programming at streamers.

As businesses contend with competition, rising costs and privacy protections, they’re investing in first-party data solutions. This is evident not just in the surge of Retail Media Networks but among individual brands: enriching digital touchpoints drives loyalty and customer retention.

Substantially greater forces will be unleashed by advances in AI this coming year. Gen AI found its foothold in marketing as a significant productivity tool in 2023. Going forward, AI will enable marketers to create more engaging and personalized content (while strengthening customer experiences) at scale. As these advances accelerate, advertisers face an array of new options, while contending with proliferation of next-gen botnets on platforms.

Creative strategies, now central to audience targeting, have evolved to incorporate the emotional and psychological underpinnings of consumer behavior. AI is poised to redefine creativity across digital advertising, as marketers break new ground along their respective AI journeys. In 2024, performance creative will firmly occupy the center of campaign strategy, with primacy.

Let’s jump into a closer look at how these trends — any one of which is a blockbuster by itself — will impact digital advertising in 2024. Undeniably, as these trends converge, brands must strategically prioritize marketing investments to navigate a fast-changing, noisy environment.

1. The Big Picture: Ad Spending

According to MarketingWeek, ad spend is projected to increase by 8.2% in 2024, reaching an unprecedented $1 trillion. The anticipated growth in advertising spend is one clear signal of the sector’s strength and adds to our confidence in digital media as critical channels for capturing consumer attention and driving business outcomes.

Internationally, advertising budgets are scaling up alongside the expansion of digital ecosystems. Emarketer predicts the CAGR for digital spend to hover around 9.3% through 2027. This is not just a reflection of market growth but intensifying competition for consumer attention online.

Marketers are progressively recognizing the pivotal role of digital channels, fundamentally shifting their allocation of advertising funds to digital. The growth is also attributed to emerging technologies and innovative advertising formats, enabling advertisers to reach audiences in novel and engaging ways.

Advertising spend forecasts suggest a trajectory that underscores the industry’s resilience amid changing economic and technological landscapes. 2024 will see intense competition from major platforms, including Tik Tok, Microsoft, Apple, and. Tik Tok is making gains on the core business of Meta and Google/YouTube, while encroaching on the ecommerce, affiliate marketing, and fulfillment operations at Amazon. Soon Tik Tok will offer GenAI chatbots and is threatening to go after CTV. Microsoft has had a few stumbles with Gen AI ads but is undeniably ramping up AI media buying services, with ad-tiers for its Open AI-fueled products. Simultaneously, 2024 will likely be the year that Apple finally rolls out its DSP for Apple TV+.

Inevitably, Big Tech will be fighting to retain audiences and advertisers, driving both to their ecommerce solutions on platform. Developments that seemed unimaginable a year ago are suddenly a reality: both Search and e-commerce are officially beachheads for competition, while the explosion of AI innovations reshapes the entire playing field.

Marketing Channels: Platform Competition and CTV

This plays out against a backdrop of Hollywood contraction, embodied by the decline of linear television and sharp reductions in production orders going forward. New releases of blockbuster series and films will be scarce compared to the boom fueled by streamer competition during the pandemic. For instance, in 2024 the studios are projected to reduce production spend up to 30%. In 2023 the prolonged labor disputes led to a lost year for the industry, halting film and series production (and next summer another strike feels inevitable with the IATSE contract up for renewal).

The premium programming disruptions potentially create headwinds for CTV ad-tier growth. Consumers face a vast array of streamer options, a fragmented streamer UX, and limited programing for the next year and beyond. Further, the at-home audience is distracted by second-screens.

The next round of the “streaming wars” will move downstream: Amazon, for example, is already incorporating shoppable ad formats into their programming. Simultaneously, as the cable bundle dies, the CTV bundle rises. Large providers will bundle subscription packages for home audiences. For early rumblings for what’s in store here, take the recent Charter / Disney carriage dispute as a sign of turbulence to come as the CTV ecosystem aligns ad-tier offerings (to advertisers and consumers), then bundles, while adapting to second-screens by lowering quality in scripted entertainment, leaning into sports, and pushing smartphone integrations.

In short, the streaming model will face growing pains as linear continues its years-long, disordered migration to CTV– during a period of contraction for the studios. Advertisers can take advantage of competition in this space–which will be led by Amazon. In general, however, online platforms will reap the benefits of the market confusion as CTV occupied approximately 10% of digital ad spend estimates. The strong bump in CTV corresponds with the decline in linear and the introduction of new ad tiers, but persistent questions regarding CTV’s quality, pricing, and reliability will contribute to demand for online ads.

2. AI in Marketing

Gen AI is rapidly transforming digital marketing by enabling more personalized and engaging content, from design to personalized ad copy, and soon video. These advances are riding alongside sharper analytics and decision-making processes online. The precision of ad personalization will be significantly enhanced by Generative AI.

Full-Funnel AI-Generated Content

The growing use of AI in advertising will be a defining change in the digital landscape. Currently, AI can streamline creative ideation. AI-driven technologies will eventually be sophisticated enough to produce high-quality, original content, catering to the specific tastes and preferences of target audiences. As ideation capabilities grow more refined, they will cross over into production of content, pulled forward by the prospect that content generated by AI allows for rapid scaling without a proportional increase in costs.

Generative AI is transforming the digital advertising industry with unparalleled creativity and efficiency. It tailors ad experiences to individual consumers and streamlines full-funnel content creation. AI enables rapid creation of dynamic ad sets that engage consumers at each stage of the marketing funnel. From awareness to consideration, and ultimately conversion, with content tailored to address the consumers’ mentality at each phase.

AI-Based Targeting

Contextual targeting can be supercharged, plus LLMs will be invaluable for privacy-safe targeting that recognizes customers by signatures in their cadence and language use.

Internal Operations and Automated Insights

The predictive power of AI is elevating marketing strategies by analyzing vast data sets for insights. This automation extends to decision-making, optimizing ad placement, and performance in real-time.

The capability to swiftly adapt and update ads is becoming a key factor in responsive campaign management, facilitating a comprehensive funnel strategy. This ensures messaging that’s more effective and customer-centric, that remains consistent and compelling throughout the customer journey. By.analyzing existing marketing data and trends, it can streamline image and video content that resonates with target audiences.

AI-enabled performance creative that’s fully integrated end-to-end will be rewarded with lower CPMs and greater reach.

A Minefield of Bots

AI bots have evolved from simple automated responders to exhibit advanced capabilities akin to human-like interactions. This progression is driven by improvements in natural language processing (NLP), machine learning algorithms, and neural networks, enabling bots to understand and respond to complex queries with greater accuracy and relevance.

AI bots are transforming various sectors, from customer service to content creation, by providing personalized experiences, automating routine tasks, and analyzing large datasets for actionable insights. The future trajectory of these bots points towards even more nuanced and context-aware interactions, blurring the lines between human and machine-driven communications. This technological advancement not only enhances operational efficiency but also opens new avenues for innovative applications in diverse fields.

While advances in AI agents provide advanced capabilities for legitimate purposes, they also contribute to the escalation of fraudulent activities in digital advertising. This phenomenon, known as fake traffic, includes malicious bots like ad fraud botnets. Fake traffic wastes advertising dollars, pollutes marketing funnels with invalid leads, and skews critical analytics, becoming a strategic business issue that will be a central marketing concern in 2024​​.

3. Impact of the 2024 US Election Cycle

In 2020, U.S. elections saw a record $8.5 billion in political ad spending, The 2024 Political ad spending is anticipated to surge to new heights. In 2024, political campaigns will likely surpass $10 billion. This growth can be attributed to the continuous escalation of political campaign intensity. Historically, political campaigns saturate digital platforms.

The sheer scale of spend will lead to higher costs and increased competition for inventory, especially in battleground states where the frequency and density of political ads can dramatically inflate prices. Advertisers across industries will need to shift ad strategies by platform, messaging, and around the election timeline.

• Digital Marketing Influence: With campaign emphasis on digital channels, trends and innovation in digital marketing are likely to be fast-tracked.
• Generative AI’s Role: Emerging technologies like Gen AI are set to radically innovate targeting and creative solutions. Its adoption implies a dual-edged potential to enhance campaign personalization and efficiency while also its use in hard-ball political races may raise concerns around ethics and the proliferation of misinformation.

End-to-end performance creative, which encompasses everything from the initial concept and design to campaign execution and measurement, is crucial for cutting through the noise. It requires a nuanced understanding of consumer behavior and audience preferences, as well as the ability to rapidly test, integrate, and optimize creative elements in real-time.

As new Gen AI capabilities combine with the heightened geopolitical pressures, the 2024 US election cycle likely represents a transformative new chapter for digital advertising, where stakes, strategies, and spending converge to shape an evolving market landscape.

4. The Primacy of First-Party Data

The impact of first-party data in 2024 encompasses the entire spectrum of digital marketing, from audience segmentation to customized content. In the face of tighter privacy regulations, first-party data becomes indispensable for precise, regulatory-compliant customer engagement. Since 2021, the digital advertising ecosystem has steadily demonstrated an unyielding trend towards first-party data as a source of insights for personalization, authenticity and relevance. In 2024, we will enter a new reality where cookie-based targeting is obsolete. If Google phases out third-party cookies late-2024, the challenge to advertisers will be immense because cookied inventory still represents the vast majority of programmatic ad buys in the US.

Brands that have cultivated relationships with their customers already have access to this gold mine of insights, drawn from purchase history, customer preferences, and engagement metrics. This data is gathered through consented and direct interactions with their consumers across various touchpoints, such as official brand websites, apps or through loyalty programs. For brands that are catching up, the golden rule for consent is simple: be transparent, create value, and deliver value.

Marketers can leverage first-party data to tailor their campaigns to the nuanced preferences of their audience, ensuring high relevance and personalization. This approach is not only compliant with data protection laws but also tends to result in higher ROI. What’s not to like?

Advantages of First-Party Data

Accuracy

Data collected directly from consumers is typically highly accurate.

Relevancy

Enables hyper-personalized marketing efforts.

Privacy Compliant

Adheres to growing regulatory standards.

Cost-Effectiveness

More effective targeting reduces unnecessary ad spend.

Advertisers are not just adapting but thriving as they harness the power of data sourced directly from their customer base. Brands are increasingly using first-party and hybrid solutions to personalize experiences and streamline campaigns. We view the strategic use of first-party data not just as a trend but a cornerstone for success.

Emerging Retention Strategies

It’s crucial for brands to focus on sustaining and re-engaging their current customer base given the rising price of COGS and fluctuations in marketing costs. In 2024, strategy will continue a shift towards a more robust emphasis on customer retention and reactivation, especially in the face of high CAC. Brands are harnessing advanced strategies, data analytics, and customer experience innovations to drive loyalty and maximize LTV.

Predictive analytics can preempt customer churn. Today, brands can implement machine learning algorithms to analyze user engagement patterns to identify at-risk customers. By targeting these individuals with personalized incentives, they simultaneously nurture ongoing loyalty. Another strategy is the integration of gamification elements into loyalty programs, which not only encourages repeated purchases but also strengthens emotional investment and brand affinity.

Innovations in Customer Experience

In 2024, investing in customer experience (CX) is paramount for retention by building Brand Experience (BX). Advancements in AI-driven chatbots offer instant, personalized customer support, minimizing friction points in the customer journey. The rise of AI technologies will continue to set new standards for interactive and memorable engagements.

Leveraging Data for Loyalty

Customer retention is increasingly data-driven. Firms can capitalize on first-party data to tailor the customer journey, before and after purchase. Generate detailed customer profiles and segment audiences to deliver highly personalized messaging. This helps forge stronger relationships and enhances the perceived value of every brand touchpoint, thereby fostering loyalty and brand value.

The growth in Retail Media exemplifies this trend. Insider Intelligence projects that retail media will account for more than a quarter of digital ad spend by 2027 in the US. Look for retail media networks to adopt standards for measurement, combine forces and become consolidated by larger platforms and new technologies in 2024.

5. Evolving Creative Strategies: Creative Targeting

Evolving creative strategies have become a cornerstone for brands aiming to stand out. Interest-based targeting is losing efficacy, while persona-specific creative assets are becoming essential for reaching ideal customer profiles (ICPs). Creative approaches are now at the forefront of digital marketing strategies. Two pivotal components at the forefront include Creative Automation Tools and Personalization at Scale, which are revolutionizing how content is created and distributed.

Creative Automation Tools

Creative automation tools are transforming the production and deployment of ad content. AI-driven design platforms offer a scalable path for the most effective visuals and messages to reach audiences that saves time and reduces costs but also enhances ad relevance and performance. An example can be seen with AI-powered technologies that allow for rapid iteration and adaptation of ad elements in real-time, catering to dynamic market demands.

Personalization at Scale

Advanced data analytics enables marketers to segment audiences more strategically and create customized messaging that resonates at an individual level. This is not just about inserting a consumer’s name into an email but about crafting a campaign that reflects the consumers’ behavior and preferences, driving higher engagement and conversion rates.

Conclusion

The more we rely on sophisticated AI and data analytics to predict consumer behavior, ultimately the more unpredictable and human-centric our marketing strategies become.

Welcome to 2024: next year presents a mosaic of increased global ad spending compounded by the impacts (and inevitable shocks) of an election year, all wrapped in an AI-fueled creative whirlwind. By harnessing the power of new, data-driven strategies and blending them with the artistry of human creativity, businesses can seize break-through opportunities to leverage these trends for success.

Hungry Robot provides creative production and consulting services to achieve our clients’ goals with cutting-edge creative solutions that drive conversions. Performance Creative is the essence of successful online marketing, harnessed to resonate with humans, not bots. It begins with understanding your customer, and it depends upon interdisciplinary proficiencies to effectively navigate the intricacies of tomorrow’s online environment using tomorrow’s technology. Our expertise in creative production, execution, and consulting equips businesses to navigate these changes with agility and foresight. We ensure that in a world where everyone is guessing the future, our clients are shaping it.

To learn more, visit us online or schedule a free creative consultation today.