A view of Times Square, New York City in June 2023.

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U.S. advertising revenue, excluding political ads, will grow 5.9 percent in 2023, instead of the previously forecast 5 percent, followed by a 5.2 percent increase in 2024, up from 4.3 percent. Those are among the key predictions made by Brian Wieser, principal at Wall Street insights provider Madison and Wall, in a forecast published on Wednesday that cited better-than-expected trends in the third quarter. However, the report also highlighted key challenges facing national TV advertising.

Total U.S. advertising revenue will hit $364 billion in 2023, or $361 billion when excluding political ads, and $397 billion in 2024, or $380 billion when excluding political ads, according to the new projections.

Looking ahead, “there appears to be a significant degree of positive momentum in the U.S. advertising industry despite sentiment that often appears to be negative,” Wieser argued. “Because last year’s comparables were so easy (the fourth quarter of 2022 was barely up, rising only 0.2 percent as the post-pandemic spending boom faded, albeit at a level that was 27 percent higher than three years earlier), we should see an acceleration in underlying advertising growth in the coming quarter.”

With that in mind, he forecast a 9 percent fourth-quarter ad improvement, up from 8 percent, previously.

“During the third quarter 2023, I estimate U.S. advertising (including directories and direct mail but excluding political advertising) grew by 8.1 percent, a meaningful acceleration over the second quarter’s 4.6 percent rate and the first quarter’s 1.6 percent,” Wieser wrote. “This acceleration in the most recent quarter was expected, if not to the same degree of strength as we ended up seeing.”

Digital platforms grew by 14.6 percent, excluding political advertising, or 12.2 percent including it, led by a 13.8 percent gain for social media platforms and a 22.8 percent jump for commerce media platforms, according to the expert.

Meanwhile, local TV, including broadcasting and cable, posted a third-quarter ad decline of 2.8 percent year-over-year.

National TV’s ad drop was more pronounced at approximately 3.2 percent, Wieser estimated. “If we exclude sellers of TV advertising who do not operate traditional broadcast networks (i.e. Amazon, Roku, Vizio, etc.), I estimate that traditional sellers of TV advertising saw declines of 5.6 percent, including their connected TV or digital inventory,” he wrote. “Within national TV, digital/connected TV, including TV networks’ streaming services, grew by 11.6 percent to account for 34 percent of total revenue (up from 30 percent of all national TV in the year-ago quarter).”

For the full year 2023, the expert sees national TV ad spending fall 12.5 percent, followed by a 9.4 percent drop in 2024. He also highlighted that “connected TV and digital forms of the medium are not sources of meaningful incremental growth” for national TV spending.

The analyst expects overall underlying TV ad spending, excluding political ads, to fall 5.2 percent in 2023 and 2.8 percent in 2024, following a 0.4 percent gain in 2022. He doesn’t project a year of TV ad growth, excluding political spending, during his forecast period through 2028.

Warned Wieser: “The overall medium faces long-term growth challenges primarily because the large advertisers who dominate TV need to shift spending away from TV to fund additional digital spending, and this shift is not offset by growth in spending from newer advertisers.”