Fears of a slowing advertising marketplace were stoked Thursday when the Commerce Department reported the U.S. economy shrank for a second quarter, meeting the long-held definition of a recession. While economists debate whether the economy with a booming labor market is really in a recession, another conflicting data point arrives. The Interactive Advertising Bureau says ad spending is poised to keep growing during the second half of the year.
Contrary to the prevailing market sentiment, the IAB says its survey of advertisers and ad agencies this month points to a projected 7% increase in ad spending during the second half of the year compared to their original plan. And they now think their media budgets will be up 9% for all of 2022. That compares to the IAB’s previous outlook released last fall when ad buyers expected spending to grow 13% this year.
“Growth is not uniform across categories,” the IAB says in the report. It says second-half ad spending is being driven by expected gains in travel (+27%) and tech (+15%) ad budgets while automotive budgets are expected to shrink 2%, and health and wellness decline by 5%.
For those that are cutting back on ad spending, the IAB survey finds two-thirds blame a slowing economy. Nearly half (45%) say supply chain issues continue to hamper their business. Inflation rates that are their worst in four decades are also weighing on the spending outlook. It’s not just higher prices at stores or gas stations either. The survey finds one in five (22%) ad buyers surveyed said they are reducing their spending because of higher rates at media outlets.
The IAB survey also provides a first glimpse of where ad buyers think 2023 will go. Regardless of what the government figures show, seven in ten (71%) said they think the U.S. is now or is likely to experience a slowing economy that will decrease ad spending within the next year. Of those, the majority (84%) expect ad spend to be impacted during the first half of 2023. However, the IAB says buyers still expect 2023 ad spend to be up overall by 10% compared to 2022. “This represents a slowing of growth as opposed to a reduction in year-over-year spend at this point in time,” the IAB says in the report.
The survey is based on an email questionnaire sent to 250 ad buyers working for brand advertisers and ad agencies. It was conducted from July 6-20, 2022.