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Ad Spend Comparisons Will Become More ‘Forgiving’ In 2023, Says Advertiser Perceptions.

Advertiser Perceptions has some good news for 2023. The research firm’s latest media and advertising market analysis shows there’s much to look forward to this year.

Much of last year’s ad slowdown was due to comparisons to an unusually strong 2021, when businesses began to bounce back from COVID restrictions and shutdowns. “These comparisons will become much more forgiving as we move through 2023,” Advertiser Perceptions says.

The research firm’s latest newsletter shows advertisers shifting budgets from traditional channels to digital ones. While connected TV (CTV) and social media will be the biggest beneficiaries, digital audio also stands to gain from this trend. In its October 2022 U.S. Macroeconomic Effects and Perceptions report, Advertiser Perceptions found that 24% of advertisers increased or reallocated budgets to digital/streaming audio.

And while the future of CTV advertising “looks bright,” don’t count out linear TV networks entirely, the report says. Streaming is only one part of the TV picture.

“Advertisers who buy across linear and CTV are increasingly stating that their purchases are CTV-first, but it’s our belief that CTV-first buyers will likely over index their media plans with streamers that can also bundle inventory with stronger linear audiences,” says Eric Haggstrom, Director of Business Intelligence at Advertiser Perceptions. “Unduplicated linear audiences will be a major deciding factor for advertisers choosing between different streaming service partners.”

TV's Measurement Struggles Hold Back Spending

The report also sees cites a lack of advertiser satisfaction with cross-platform measurement as holding linear TV back. While they’ll continue to mainly rely on Nielsen as their primary currency for buying TV, “they recognize its limitations and are open to experimenting with alternative providers,” Haggstrom says. “Until there is a short -list of industry wide accepted alternative currencies, TV's measurement struggles may hold back ad spending.”

Another trend Advertisers Perceptions sees for 2023 is a decline in performance-based advertising by companies that mainly sell their products or services online. Companies in the ecommerce, sports betting and crypto currency fields have historically spent much more on advertising as a percentage of their revenues than most established firms and concentrated their ad spend heavily in certain "performance" channels such as paid search, paid social and display. That’s been a huge boon for those channels.

But this year, the expectation is that many of these companies in emerging online industries will be unable to grow their advertising budgets to the same degree that they did over the past few years. “In fact, they will likely show less growth than the overall industry,” Haggstrom says.

Retail Ad Networks Heat Up

Also on the hot list for advertisers in 2023: retail advertising networks, such as those offered by Lowe’s, Walgreens, Target and other retail giants. Seven in ten advertisers using these data-driven digital ad networks plan to increase the portion of their general digital ad budgets that will go to digital retail advertising in 2023.

Flashing back to In July 2022, just one in 10 U.S. advertisers reported positive impacts to their businesses as a result of supply chain disruptions, elevated inflation rates and rising interest rates. But by October 2022, that portion doubled to one in five as more companies found ways to win market share from struggling competitors or widen profit margins through price increases to consumers.

For media sellers, this has translated into reinstated or renewed ad budgets as advertisers looked to bring back digital ad campaigns in time for the Q4 holiday season. The portion of U.S. advertisers reporting paused or reduced ad budgets was down significantly in October compared to July and cuts to many digital channels are also down significantly, Advertiser Perceptions says.

The firm’s advice heading into the new year: “For broadcasters, now is the time to make sure advertisers have what they need to start Q1 2023 strong. For digital media companies, it’s important to note that some of the influx of spending enjoyed [in Q4] may not last into 2023.”

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