The Conference Board Leading Economic Index has predicted economic downturns in the U.S. with a 100% hit rate – and it is predicting one for 2023. But instead of triggering an advertising downturn, could a recession actually cause an advertising boom?
That notion, based on the belief that the pandemic taught businesses that advertising in tough times produces results, was explored in a webinar Tuesday featuring executives from Borrell Associates and digital marketing company Adcellerant.
According to Borrell’s Q3-Q4 2022 survey of ad buyers, twice as many plan to spend more (19%) in 2023 than plan to spend less (9%). A majority (72%) say their ad budget will remain the same this year.
“We asked the same question in the spring of 2019 – when the economy was booming – and found that the same amount – 19% – said they planned to increase spending and more (12%) actually said they planned to decrease it,” Corey Elliott, Executive VP of Local Market Intelligence at Borrell Associates, said during the webinar. Keep in mind that per the LEI, all signs were more positive in 2019 than they are now, suggesting that lessons businesses learned during the pandemic are having an impact on spending plans today.
In another surprise, there is evidence of strong growth potential for numerous media channels. One in four local ad buyers plan to increase spending on social media, 16% on search engine marketing and 13% on website ads. On the audio front, 5% will increase spending on AM/FM radio and 4% will start buying it. Meanwhile 3% will increase spending in streaming audio and 5% will start buying it.
There is also an opportunity to attract advertising newbies. Defined as the 10% of companies in business for less than five years, these businesses bought no advertising last year. Yet only 7% said they wouldn’t buy advertising in 2023. “These new guys are getting more interested in advertising,” said Elliott.
Another fertile opportunity for ad sellers in 2023 are the 6.2 million high propensity businesses that have been created since the 2020 pandemic. “There were nearly 4 million more of these businesses created since March of 2020 than were in the prior 34-week period,” Elliott said. That’s an increase of 178%.
These younger businesses (ones that have been around for five years or less) are typically smaller – 75% have fewer than 10 employees. They buy fewer types of media and have less marketing experience – 73% of younger businesses are considered novice marketers. Importantly, they’re more likely to be increasing their marketing budgets.
Young businesses are also less likely to use traditional forms of media and are far more prone to try something new in 2023. “They aren’t natural marketers and they really need help in this department,” Elliott explained. “Regardless of how many different types of media they are buying or will buy – a much greater percentage of them are planning to spend more in 2023.”
In another key finding, Borrell found that smaller businesses exploded from 2019 to 2022 while many larger ones failed.
What The New Normal Looks Like
After the pandemic cratered business in some ad categories, many are starting to get back to normal. But the “new normal” looks different for almost every category. “We see that some can weather this recession a little bit better than others,” Elliot said.
In one of the webinar’s most key takeaways, two execs from Adcellerant, Melissa Sheehan, Chief Revenue Officer, and Ben Bouslog, VP of Business Development, itemized the top eight industries for media sellers to target in 2023, the ones expected to weather the storm better than others. They are: Experiences (movies, sporting events, amusement parks); Professional Services (legal, insurance, financial services); Electronics (TVs, computers, smartphones); Home & Family (veterinary services, cleaning, technology); Recreation (RVs, boats, books, garden supplies); Retail (jewelry, watches, therapeutic equipment, luggage); Healthcare (eye care, preventative health, dental services); and Travel (lodging, car rentals, airfare).
Sheehan and Bouslog also offered three suggestions for how to win new business:
Host A Digital Webinar
“This can position your team as an expert and build trust among the business community,” Bouslog said.
Host An In-Person Seminar
Whether a breakfast and learn, lunch and learn or even a wine and learn, in-person seminars help build a prospect pipeline.
Double Down On Training
The key here is to work with your digital partners on the right training, focusing on media mix and consultative sales. “The research has shown us that these new businesses are open to new products, both traditional and digital, and that they're looking for a marketing expert to help them,” Sheehan offered. “This is a great opportunity for you to make sure that you and your staff are those marketing experts.”