Advertiser Update: Spending Cutbacks Are Down, As Is Inflation Impact.
Advertiser Perceptions' just-released report for October 2022, focused on the effects of macroeconomic volatility on businesses and advertising decision making, shows a significant decline in advertisers cutting back on ad and marketing spend, hitting pause on ad budgets, or delaying new product launches or promotions, compared to July/August. Also down significantly are the number of advertisers experiencing negative effects from inflation and rising interest rates.
The bi-monthly report, which surveys 300 U.S. advertising executives involved in media brand selection decisions who spend at least $1 million annually on advertising, also shows a major increase to one in five advertisers saying supply chain disruptions, elevated inflation rates and rising interest rates are helping their business. “Some advertisers may have succeeded in winning market share from struggling competitors, and we’ve seen earnings reports from advertisers that have been able to widen profit margins through price increases to consumers,” the report says.
At the same time, two-thirds of the sample agree that consumers have less to spend on their products due to the rising cost of living, and two in five continue to see declining consumer spend. As a result, retail and consumer packaged goods advertisers are most likely to report still cutting back on ad budgets, while auto advertisers are among those likely to be delaying new product promotions.
What budget cuts there are, are having a greater impact on traditional media, including AM/FM radio, print, linear TV and out-of-home, with negative impact greatest on the latter two. On the digital media side, spend appears to have come back to digital channels, while the share of social media advertisers cutting back on social ad spend is down by half since July/August.
Advertiser Perceptions' report also sees half of surveyed advertisers increasing the number of social platforms they are working with in 2022, while a third report working with a greater number of connected TV partners. “As advertisers look for the most efficient ways to drive sales, it will be possible to attract them to test new partners and formats, if the measurement is there,” the report says.
As for how this impacts the full-year forecast , the survey shows almost as many advertisers, one in three, have adjusted their key performance indicators upward vs. downward. “It remains important to stay connected with advertiser clients and understand how the macroeconomy is affecting them specifically,” the report says.