Market Analysis – 82101906 – Digital media purchase and planning services

1. Executive Summary

The global market for digital media planning and buying services is valued at est. $680 billion in 2024 and is projected to grow at a ~8.1% 3-year CAGR, driven by the continued shift of advertising budgets to digital channels. The primary strategic challenge and opportunity is navigating the deprecation of third-party cookies, which fundamentally alters targeting and measurement. This forces a critical re-evaluation of supplier capabilities, prioritizing those with robust first-party data solutions and advanced analytics to maintain campaign effectiveness and ROI.

2. Market Size & Growth

The global Total Addressable Market (TAM) for digital media spend is projected to reach $735 billion by the end of 2025. Growth is fueled by expanding investment in channels like Connected TV (CTV), retail media, and mobile advertising. The three largest geographic markets, accounting for over 70% of total spend, are: 1. United States, 2. China, and 3. United Kingdom.

[Source - Statista, eMarketer, Q1 2024]

3. Key Drivers & Constraints

1. Demand Driver: Persistent migration of ad spend from traditional media (linear TV, print) to digital formats, particularly video, social, and CTV, which offer superior targeting and measurement capabilities.
2. Demand Driver: Proliferation of e-commerce and direct-to-consumer (DTC) business models necessitates sophisticated digital performance marketing to acquire and retain customers.
3. Technology Driver: Advancements in AI and machine learning are enabling more efficient programmatic buying, predictive audience modeling, and automated creative optimization, increasing ROI potential.
4. Regulatory Constraint: A tightening global privacy landscape, led by GDPR and CCPA, imposes significant compliance burdens and limits the use of consumer data for targeting and personalization.
5. Technology Constraint: The impending deprecation of third-party cookies by major browsers (e.g., Google Chrome) is the single largest technical disruption, threatening the viability of established targeting and attribution models.
6. Cost Constraint: Increasing competition for user attention on mature platforms (e.g., Meta, Google Search) is driving up media costs (CPMs), while ad fraud remains a persistent drain on budgets, estimated at $80-100 billion annually. [Source - World Federation of Advertisers, Jan 2024]

4. Competitive Landscape

Barriers to entry are High, driven by the need for massive scale to secure preferential media rates, significant capital investment in proprietary ad-tech and data platforms, and intense competition for specialized talent.

⮕ Tier 1 Leaders * WPP (GroupM): Largest global media buying group, offering unparalleled scale and leverage with media owners. * Publicis Groupe: Differentiates through its integrated 'Power of One' model and heavy investment in AI/data platforms like Epsilon and Sapient. * Omnicom Media Group: Strong focus on data analytics and strategic consulting via its 'Omni' marketing orchestration platform. * Interpublic Group (IPG Mediabrands): Known for its strong performance marketing and data-driven capabilities through units like Kinesso.

⮕ Emerging/Niche Players * S4 Capital (Media.Monks): Digital-native challenger focused on integrating content, data, and media under a single, agile P&L. * Brainlabs: Fast-growing independent agency with a strong reputation in performance marketing and data science. * PMG: Technology-forward independent agency with a proprietary marketing intelligence platform, 'Alli'. * Retail Media Networks (e.g., Walmart Connect, Amazon Ads): Increasingly acting as both media channel and agency, offering planning and buying services on their platforms.

5. Pricing Mechanics

The predominant pricing model remains a percentage of media spend, typically ranging from 3-8% for large accounts and 10-15% for smaller engagements. This fee covers strategy, planning, buying, execution, and basic reporting. However, there is a strong client-led push towards models that better align agency incentives with business outcomes. This includes fixed retainers for strategic work and, increasingly, performance-based fees tied to specific KPIs like Return on Ad Spend (ROAS), Cost Per Acquisition (CPA), or lead generation targets.

Technology and data access fees (e.g., for Demand-Side Platforms, ad verification, or data management) are often passed through as a separate line item, typically calculated as a percentage of media spend (1-3%). The three most volatile cost elements are:

1. Media Costs (CPM/CPC): Auction-based pricing is subject to extreme volatility based on seasonality, audience demand, and channel competition. Key channels like CTV and TikTok saw CPM inflation of est. +20-30% over the last 18 months.
2. Specialized Talent: Salaries for data scientists, programmatic traders, and commerce strategists have increased by est. 10-15% year-over-year due to talent scarcity.
3. Ad Tech "Tax": Fees for the various platforms in the programmatic supply chain can fluctuate based on usage and contract terms.

6. Recent Trends & Innovation

• AI-Powered Optimization (Q4 2023 - Present): Major platforms (Google Performance Max, Meta Advantage+) and agencies are aggressively rolling out AI tools that automate campaign setup, audience targeting, and creative generation, shifting the role of planners towards strategic oversight.
• Rise of Retail Media Networks (RMNs) (2023): Ad spend on RMNs grew by ~25% in 2023, reaching over $125 billion globally. Brands are redirecting budgets to leverage retailers' valuable first-party purchase data for targeting at the point of sale. [Source - eMarketer, Feb 2024]
• Cookie Deprecation & Identity Solutions (Q1 2024): Google began disabling third-party cookies for 1% of Chrome users, signaling the final phase of this transition. In response, agencies are accelerating partnerships with data clean rooms and alternative identity providers to build new measurement frameworks.
• Consolidation in Ad Tech (2023-2024): A wave of M&A activity has seen ad tech firms consolidating to build more comprehensive, end-to-end platforms. A notable example is Magnite's acquisition of streaming ad server SpotX, consolidating the CTV supply side.

7. Supplier Landscape

8. Regional Focus: North Carolina (USA)

Demand for digital media services in North Carolina is strong and growing, outpacing the national average. This is fueled by the state's robust and expanding technology (Raleigh-Durham), financial services (Charlotte), and life sciences sectors, all of which are heavy digital advertisers. Local supplier capacity is solid, with a mix of global network agency offices (e.g., McKinney/Cheil Worldwide in Durham) and a vibrant ecosystem of independent, specialized digital and performance marketing agencies. The state's favorable business climate, lack of a digital advertising tax, and deep talent pool from top-tier universities provide a stable and cost-effective operating environment.

9. Risk Outlook

10. Actionable Sourcing Recommendations

1. Mandate a shift from pure percentage-of-spend models to a hybrid or performance-based structure for all new RFPs. Target at least 20% of agency compensation to be tied directly to key business outcomes (e.g., ROAS, CPA) rather than media volume. This aligns supplier incentives with business goals and mitigates risk from volatile media costs.

2. Prioritize suppliers with demonstrated, proprietary first-party data solutions and identity graphs to future-proof against cookie deprecation. In the next sourcing event, require bidders to detail their post-cookie measurement strategy and pilot a solution with a tech-forward agency to benchmark against incumbent performance and de-risk the transition.