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Marcus Johnson (00:00):

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, Yory Oscar and listeners, welcome to Behind the Numbers, EMARKETER video podcast made possible by Viasat Ads. I'm Marcus, and joining me for today's conversation, we have principal analyst, heads up are media, tech and advertising teams living in New Jersey. It's Yory Wurmser.

Yory Wurmser (00:40):

Hey, Marcus. How are you doing?

Marcus Johnson (00:41):

Hey, fella. 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.

Oscar Orozco (00:49):

Listeners. Hey, Marcus. Glad to be back. It's been a while.

Marcus Johnson (00:54):

Welcome back. Yeah. Three month ban and he's back on the show.

Oscar Orozco (00:59):

It was the deserved. I earned that one.

Marcus Johnson (01:03):

It always is. Today's fact is the moon is drifting away from Earth at about... 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 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 moon will eventually appear too small in the sky to completely block out the sun, which means no more a total eclipses. Instead, much cooler in my opinion, we'll get an annular, basically a ring of fire, eclipse.

Oscar Orozco (01:55):

What is that?

Marcus Johnson (01:56):

It's way better.

Oscar Orozco (01:57):

What is that exactly? How does that look?

Marcus Johnson (02:02):

It's basically the moon will fill out the middle of the sun, and so there'll be the sun will show around the moon. It'll look like a ring of fire.

Yory Wurmser (02:11):

Yeah. It'll look like a burning ring.

Marcus Johnson (02:12):

Yes.

Oscar Orozco (02:13):

Incredible.

Marcus Johnson (02:14):

Can't wait for that. Will I be here still? Probably.

Oscar Orozco (02:18):

You never know.

Marcus Johnson (02:18):

Still doing the show.

Oscar Orozco (02:19):

I'm not sure if the moon and the earth will still be here then, but what is 600 million years? Yeah. Not sure.

Marcus Johnson (02:27):

Yeah. Don't worry about any of this. We won't be here to see it. That's bleak. All right. Anyway, today's real topic is ad spending, much more uplifting. 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 hit, if you guys remember in 2022, that summer of 9% inflation and also the lows in terms of consumer sentiment witnessed in spring of this year after President Trump first rolled out steep new global tariffs.

(03:12):

Former Behind the Numbers guest and special guest, I should say, and University of Michigan's survey director Joanne Hsu, explains that, "With the federal government shut down dragging on for over a month, consumers are now expressing worries about potential negative consequences for the economy." 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?

Oscar Orozco (03:39):

Yeah. It's a great question. So much negativity in the air, but 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 updates, our ad spending forecasts here at EM. Overall, it's held up pretty well. It's been resilience. There have been brief periods of uncertainty and positive and spending and campaigns being delayed. But ultimately, it's all come back to being just a healthy year with what seems to be revisions every quarter when we update our own estimates here at the company.

Marcus Johnson (04:40):

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?

Oscar Orozco (04:47):

There were. There was a Q2 downgrade where we expected the market to grow at very high single dig digits. I believe it was about 9.5% growth, but our Q3 update was we revised upwards about almost two percentage points. The expectation is we again, a slightly modest uptick here when we publish our estimates in just a few weeks time.

Marcus Johnson (05:14):

Yeah. It's hard to figure out... An upward revision. Sounds like things are improving a down revision, sound 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 already 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?

Yory Wurmser (05:39):

Like Oscar, my views at advertising and general has been amazingly resilient. You're seeing that both in the total advertising numbers that we have, which is a little higher than IAB is at 7.0% growth for all advertising spend and for digital, I think it's around 11.5% or 11.4%. Going back to when the tariffs sit, our best case scenario I think was below 11.4%. The economy is still suffering from tariffs. We saw imports go down in October. We are probably going to see some mild inflation as a result of the tariffs, but nonetheless, ad spending keeps on at least in digital in the double digits, which is really impressive.

Oscar Orozco (06:35):

Yeah. I would mention a quick note that the revision in Q2, which is always the case, but it was given what was happening with tariffs at that time. There was a little bit of an element 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. I do think we need to start thinking about 2026. However, as Yory was alluding to here, there's still a lot of uncertainty there, so something that we're keeping an eye on here.

Marcus Johnson (07:18):

Yeah. What are we expecting for 2026 in terms of total ad spend? Is it going to be slightly lower than this year, slightly higher on par?

Oscar Orozco (07:27):

Yeah. The numbers, we're not expecting any inflection point spike in growth. It's a linear story from 2025, but the expectation for now from our Q3 estimates is still slightly low double digit growth, and we're reassessing now here in the months of December. But that still seems to be the case because again, everything that we saw through the spring, early summer, ended up just not having as much of an impact on a market as we initially expected. We expect the same resilience really next year.

Yory Wurmser (08:11):

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 as that number for traditional gets smaller, there's just less incremental dollars for digital.

Marcus Johnson (08:35):

At 80% and growing, we're expecting less than 90% by the end of our forecast, in terms of digital share of the total ad spend pie. It's hard to tell, because there are concerns that the economy is being propped up artificially with a lot of AI investment. Ms. Hsu 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. That has made things look a lot better. However, high prices is still hurting folks. Matt Grossman and Sam Goldfarb of The Journal noting that inflation has dropped from the highs that have reached three years ago, but at 3% in September is now remained elevated above the 2% target for almost half a decade. That is still hurting folks.

Oscar Orozco (09:36):

Yeah. We're definitely seeing some signs there, are bear markets, is that what we're going to see in early 2026? I mean we're seeing from the consumer side. You talked about inflation, but even a hiring slowdown, how is that going to ultimately impact consumers, which we know here the US economy is driven so much by consumer spending. There are definitely some worrying signs, but we'll see how that starts to shake out, especially in Q1. I do expect Q4 to still show some strength and time will tell, but that seems to be what the course is.

Marcus Johnson (10:15):

Yeah. Digital is such a huge part of the total pie that it is a bellwether digital goes as the total ad industry goes. Similarly, the triopoly or their digital ad market goes the way the triopoly because they are also such a significant piece of that. This year we estimate that the triopoly Google, Meta, and Amazon will account for 61.7% of total US digital ad dollars. That's up a touch from last year's 61%. Yory, what's your take on how the triopoly is faring and changing at the moment?

Yory Wurmser (10:56):

They're doing incredibly well, all three of them. When you look at Meta's ad growth and Amazon's ad growth, has been ad revenue growth. They're both well above the mean 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 5.7%. Search as a format is just not growing. It's a more mature format. It's not growing as quickly as a display. There's always the grill in the room with search, which is AI and how much that's starting to affect ad spending growth in search. Google's got its work cut out for, but with Gemini 3's release a couple of 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.

Marcus Johnson (12:14):

Yeah. They're not growing as fast as the others, and that leads me to the second point that I want to make here. I want to make two really quickly. The first is, Meta is doing well and it's interesting if you scratch below the surface, we estimate that Instagram now making more money in terms of advertising for Meta than Facebook. I think that's a big part of the story is how well Instagram is doing to help Meta get to where it is.

(12:38):

Then secondly, this jumped out to me Oscar, and I know we're talking about this year and 2026, but I wanted to talk about 2027 for a second because in 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.

Oscar Orozco (13:05):

That's a quietly been and stealing the thunder a little bit there, but it's going to be one.

Marcus Johnson (13:10):

Sorry.

Oscar Orozco (13:10):

No, it's absolutely fine. But one of our big headlines, exactly how in two years time we expect Meta to be above Google, which is huge news. I would also to speak a little bit to Yory's point in Google, I want to shout out YouTube. 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. Google is still in a very strong position, but to round out the triopoly, Amazon. 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 offsite advertising by their DSP, which has been a huge driver. Going back to the YouTube story, prime video for them, the ads being scaled there and what that means for CTV as well. Yes, the three are doing well, taking slightly more share of the market. It's only a few tens of a percentage, but it's so meaningful because we're talking about billions of dollars. Yeah.

Marcus Johnson (14:28):

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 digital ad dollars as fourth place, 5th, 6th, 7th, 8th, 9th, and 10th combined. That's the gap between third and the rest of the pack. Let's turn attention to this year and then to next year. My first question, focusing on 2025, Yory, for you, what's been the biggest ad spending milestone slash standout number or moment this year?

Yory Wurmser (15:12):

You stole my thunder because I had two different, I stole my thunder on the first one, which... I know. The first number I was thinking is that digital is going to pass 80% of total advertising, which I think that's just a stunning number because I think it was just in, Oscar, correct me, but I think it was around 2019 where Pat became the majority.

Oscar Orozco (15:36):

That's about right. Yeah.

Yory Wurmser (15:37):

But it is 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. That's one. The second one is the one you mentioned, which is Instagram passing Facebook as the leading generator of ad revenue for Meta. Again, something you couldn't have foreseen a few years ago.

Marcus Johnson (16:02):

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?

Oscar Orozco (16:14):

Yeah. Mine is less a particular number forecast milestone from that angle. I wanted to talk a little bit more, and I just hinted at it with the 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, the ad tiered product in the SVOD space, we have the YouTube, the emergence of fast channels, 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 have growth at 14% roughly for 2025. There are again, just so many moving parts there, integrations and partnerships with retail media platforms, Amazon mainly. Yeah. To me, it has to be CTV. It's just such an interesting channel.

Marcus Johnson (17:10):

I'm glad 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 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.

Oscar Orozco (17:42):

Yeah. Maybe Roku viewers have seen this Howdy platform lines 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 healthy growth there when their acquisitions... Frndly TV was a recent one, and just the fact that there seems to be more advertiser interest for Roku, especially SMBs. That's always a good sign.

Yory Wurmser (18:11):

They might lose that spot though next year, because Disney Plus and Hulu are... Disney will probably jump back above, but that's not a sign of anything going wrong with Roku. It's just a combination.

Marcus Johnson (18:23):

Yeah. That's a good point. 2026, Yory, what you think is going to stand out the most next year?

Yory Wurmser (18:32):

I'm going to cheat a little bit and talk about 2027, what I think is a huge turning point, I know, and 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 of CTV and TV.

Oscar Orozco (18:50):

That's a good one. It's a great one. Continue.

Yory Wurmser (18:52):

By 2027, social video is actually going to get be larger than the combination of CTV and TV, which is growing not that quickly when you look at them as a combination.

Marcus Johnson (19:05):

Wow. That is a good one. Sorry, Oscar, should we just skip you?

Oscar Orozco (19:08):

No, no, No, please don't. I have so much to say. Just in the same sphere there, for 2026, to me the biggest milestone, now I am going to specifically talk about a data point. It's that 3 out of 10 digital dollars will go to social. Again, yeah, driven almost entirely by the video piece, but it's absolutely... Yeah. It's interesting to consider because we've predicted stagnation at times and loss of momentum and social just losing prominence, but it just continues to not be the case. It's to find logic. Strains from, of course, videos driving it, but platforms like Reddit, slight rebound from X as well seems to be doing a bit better on the ad side, and TikTok of course. The heightened competition and the use of AI to drive performance, so many things going on there that for me it's social next year. Yeah.

Yory Wurmser (20:12):

Yeah. It's the last one I think you said the AI, because Meta is 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.

Oscar Orozco (20:38):

Yeah. One last thing, I need to shame that we call out a forecast that I've just completed, but if 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 on the ad side as well and just the overall strains for the social platforms.

Marcus Johnson (21:00):

Yeah. Danny, we'll cut that. We can't have Oscar using this as a self-promotional tool. It's not the platform. Two things from 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 is?

Yory Wurmser (21:25):

Olympi.

Marcus Johnson (21:27):

Because of elections, it's not going to be. It is been in the 60 to 70 billion range in terms of TV ad dollars forever, every single year, and then this year, it's been a step change down from about 59 billion to 52. But then next year, it'll hold fast around 50 because of those major events. 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.

(21:58):

I thought it was an interesting way for TV to be declining. Then the second one here was Reddit will double add revenue. I think it's one of your forecast stories actually, Oscar you guys pulled out, will double add 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.

Oscar Orozco (22:29):

Yeah. It's definitely smaller under a billion just a year or two ago. But nonetheless, yeah, as you mentioned, it's not easy to climb over some of these huge competitors that have been so successful for a long time. Reddit is absolutely a success story.

Yory Wurmser (22:44):

They're just getting started with things like AI and search advertising, so they've got a lot of to grow.

Marcus Johnson (22:49):

Yeah. Gents, great points all round and unfortunately, all we have time for, but thank you so much for joining me for today. Thank you first to, Yory.

Yory Wurmser (22:56):

Great to be here.

Marcus Johnson (22:57):

Yes sir, and of course to Oscar.

Oscar Orozco (22:58):

Thanks, Marcus. Thanks for having me back.

Marcus Johnson (23:00):

Yes, sir. Welcome back my friends, and thank you so much to the production crew and to everyone for listening into Behind the Numbers, EMARKETER 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. The 2026 Summit panel, it's on AI's Impact on Streamings Ad Creative, so there's that episode tomorrow. Wednesday, 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.