Source: www.insideaudiomarketing.com, August 2023
Is the sluggish ad market finally showing signs of life? According to several analysts, there appear to be glimmers of hope for the second half of 2023, following a year-long slowdown which resulted in record layoffs and budget-slashing at media and tech companies.
“We think the underlying tone is positive,” Macquarie Senior Media Tech Analyst Tim Nollen says, citing a second quarter GDP report showing while consumer spending slowed to +1.6%, business investment spending rose to +7.7%. “We have found this to be the most relevant leading indicator of ad spending historically.”
As to whether this bodes well for radio, TV and print, which continue to face weaker prospects vs. digital, Nollen says those losses will continue to be offset by strong digital gains, contributing to overall positive growth in the U.S. and global ad markets. “There will always be sector-specific and company-specific factors that affect individual performance,” he says. “In general, we think linear TV remains weak, but CTV (connected television) looks stronger, and social media is rebounding.”
Madison And Wall’s Brian Wieser agrees, saying that recent earnings were “an affirmation that the advertising industry expanded solidly in the second quarter of 2023, and at a better pace than what we saw in the first quarter, albeit on easier comparables vs. the year-ago period.” Noting the past year’s declines, Wieser points out that the double-digit growth levels the ad industry saw during 2021 and early 2022 were not sustainable. “You were always going to see some deceleration,” he says.
While any recovery seen so far this year hasn’t been felt equally among all companies and industries, ad declines from some sectors in the recent quarter have been offset by an increase in spending from categories like consumer packaged goods, health and wellness. PepsiCo and Nestle, for example, said during earnings calls that they plan to increase their ad spend in the second half of 2023, while auto advertisers are increasing their ad spend vs. last year.
In a normal advertising economy, “there are usually six or seven categories that are increasing, a couple that are kind of flat and a couple that are down,” Wieser tells Axios, “so what we’re seeing is not unusual. It’s just a normal ad market.”
The global ad market is expected to grow 5.9% in 2023, according to the GroupM agency’s latest mid-year forecast. The digital ad market is expected to grow at its slowest rate since the financial crisis in 2009, although that growth rate is mostly a result of maturation in the industry. Retail media will grow faster than digital this year, as more traditional retailers invest in building their own digital marketplaces.
