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Forecast: Ad Spending Will Continue To Rise In 2023 But At Slower Pace.

As the world enters a period of economic downturn, rising inflation and record-setting interest rates, advertising spending is still growing, but the growth is slowing down. The latest dentsu Global Ad Spend Forecast says ad spending grew 8.0% in 2022 or by $53.0 billion. That’s down marginally from the agency’s 8.7% growth forecast in July. The latest forecast anticipates $713.6 billion (US) will be spent worldwide this year.

The Americas region achieved stronger growth, up 13.2%. In 2023, the Americas region is expected to parallel a more moderate global ad spend growth rate of +3.8% to $740.9 billion (US). That is down by 1.6 percentage points from the previous prediction of +5.4% for next year. But the U.S. is anticipated to do better, up 13.8% in 2022 with a 3.8% boost in 2023 and 4.9% growth in 2024.

“Macro-economic challenges, including rising inflation of energy, food, and fuel costs, rising interest rates, and the impact on business and consumer spending have led to expectations of slower ad spend growth,” dentsu says in its new forecast.

Peter Huijboom, Global CEO of Media & Global Clients at dentsu International says 2022 has been “another year of strong growth” for the advertising industry, despite all the political and economic uncertainty. Although 2023 “will also show a continued growth of overall ad spending,” dentsu’s data shows it is actually rising ad prices driving the growth for next year, not an increase in ad volume or inventory sales. In fact, ad spend will only grow 0.6% based on constant prices compared to 3.4% growth at current prices.

Audio Poised For 2% Growth In 2023

Zeroing in on audio, dentsu says global ad spend for traditional and digital audio increased by 3.6% in 2022 to reach $35.6 billion (US). That was good for a 5.0% share of total global ad spend. It follows an 11.6% rebound in 2021, when the worldwide audio market recovered to pre-pandemic spend levels.

Breaking that down, traditional radio ad spend increased by 2.0% while digital audio spend increased by 9.3% this year. The total audio ad market is forecast to grow 2.0% in 2023 to $36.3 billion, thanks to events like the Rugby World Cup. From there audio is forecast to deliver $37.4 billion in 2024 (+3.1%) and $38.3 billion in 2025 (+2.4%).

“While digital and TV now account for more than 80% of global ad spend, brands will still use print, audio, OOH and cinema for the unique opportunities, targeting and formats they can offer,” dentsu’s December 2022 forecast says. “All of these channels (bar Cinema) can be a part of the digital ecosystem, with their digital elements available in omnichannel DSPs meaning they can easily be planned and bought as part of an integrated campaign. It is also important to remember where the channels’ individual strengths lie.”

As many radio companies know all too well, this year “began strongly, but a slowdown in growth was seen as the year progressed with the ad market impacted by economic uncertainty,” dentsu says.

The trend toward digital spending continues. Online channels are forecast to increase their share of the ad pie from 55.3% in 2022 to 58.2% in 2024, with new categories within digital, notably retail media, showing the biggest increases.

All the growth – both in 2022 and in 2023 – is coming from digital. Traditional media (linear TV, print newspapers and magazines, out of home, radio and cinema) continue to account for $261.4 billion (US). Traditional media is forecast to rise just 0.3% in 2022 and decline by 2.0% in 2023.

One reason why digital continues to deliver such strong growth is because advertisers are prioritizing performance-based ad campaigns due to “the increased business focus on immediate gains to help ride out the temporary economic slowdown,” Huijboom says.

However, the pace of digital growth is easing up. Global digital ad spend increased by 13.7% in 2022 but is forecast to slow in 2023 to 7.2%. That’s a downward revision from 9.3% growth in dentsu’s July 2022 report.

Looking ahead to 2024, dentsu expects the global ad market to pick up the pace to 4.8% growth to $776.9 billion (US).

Download the dentsu forecast HERE.

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