The modern music industry may run on subscriptions — streaming, satellite radio, Peloton, et al. — but it still depends greatly on the advertising business. Indeed, non-subscription-based streaming, along with social media and broadcast radio, continues to produce important royalties and licensing income for record labels and music publishers.  

Unfortunately, 2023 was a lackluster year for advertising-based businesses, as brands held back due to economic pressures. The slowdown extended into the fourth quarter: Trade Desk, a digital advertising platform, warned in November that expectations for revenue growth in 2024 “may be premature.” 

So, can people expect improvements in 2024? According to a new report by Mediaocean, the outlook is mixed: While some advertising-based businesses can expect more demand this year, others may not witness a rebound.  

In November, Mediaocean surveyed nearly 1,100 marketers, ad agencies, media companies and tech platforms, among other companies, about how they expect to spend on various types of advertising in the coming year. The survey revealed that advertising dollars will continue to flee from legacy media — namely print and television — in favor of social media, digital display and video and connected TVs.  

Social platforms such as TikTok top the list of predicted ad spending in 2024: 69% of respondents said they expect to increase their spend in 2024 on social media, while only 28% said they will maintain social media spending and just 3% plan to decrease spending. Social media has taken the biggest jump in the last two years. When surveyed at the end of 2021, 56% of respondents — 13 percentage points less than the latest survey — said they expected to spend more on social platforms, while the percentage of people who planned to maintain spending in 2022 was 10 percentage points higher at 38%.  

Digital display and video advertising showed a similar breakdown to social media: 65% of respondents expect to increase, 30% plan to maintain and 5% expect to decrease their spending. Most respondents also expect to increase their spending for connected TV and search. These categories were little changed from the prior year.  

Radio and audio advertising will fare about the same as last year: 24% of respondents expect to increase spending on radio and audio in 2024, down from 25% in 2023, while 54% of respondents plan to maintain their spending levels and 22% expect to decrease their spending. Going into 2023, 51% of respondents expected to maintain radio and audio spending and 24% planned to spend less. However, those numbers mark a distinct downward trend from 2022, when 61% of respondents said they expected to maintain radio ad spending while just 15% expected a reduction. 

Given that data, radio companies that have both digital and broadcast businesses should fare better than those without a digital component – and they may already be seeing a recovery. Speaking at the Wells Fargo TMT Summit on November 29, iHeartMedia chairman and CEO Bob Pittman said the company’s digital advertising “seems to have already recovered" and that radio advertising will recover when brands see an economic recovery on the horizon. “Advertising tends to be a leading indicator,” he added. The same trend can be seen, albeit in a more negative direction, at Audacy, which faces a possible bankruptcy caused in part by lagging broadcast revenue: In the third quarter of 2023, spot and network advertising was down 8.9% year over year while digital revenue rose 3.4%.   

TV advertising has taken the biggest fall over the last two years. Going into 2022, only 15% of respondents expected to spend less on local TV and 13% planned to spend less on national TV. Two years later, 33% expect to spend less on local TV and 27% expect to reduce spending on national TV.  

Although audio streaming has eaten into the time people spend listening to radio, about 90% of Americans still listen to the radio each week. The same can’t be said for video, however, as video streaming has sharply reduced the audience for cable television. In the third quarter, the penetration rate of traditional pay TV — cable, telco and satellite — fell to 54.8% after those companies lost nearly 2 million subscribers, according to MoffettNathanson. That marks the lowest penetration rate since 1989.  

That can be chalked up to the swift rise of video streaming platforms. In the third quarter, YouTube TV surpassed satellite company Dish Network to become the fourth-largest multi-channel video programming distributor. MoffetNathanson believes YouTube TV could surpass satellite company DirecTV for third place in less than a year.