Dentsu, the global ad giant, this week said it expects the U.S. ad market will grow by modest 3.8% next year, or roughly a third of the 13.8% that it expects for this year. But Peter Huijboom, Global CEO of Media & Global Client, says next year’s gains will be driven “mostly by inflation, rather than increased advertising volume or inventory sales.” That will put the focus on a handful of ad categories that are growing. The good news for radio is that many of its strongest categories are in the Dentsu growth column for 2023.
Although Pharmaceutical sector growth shows a significant slowdown from the past two years, Dentsu still expects drug companies to have one of the fastest growth rates of any ad category next year with a projected 5.5% increase in global ad spending.
“The sector is driven by the continued demand for COVID-19 products, but the investment in advertising is expected to drop compared with the pandemic outbreak period. The sector also faces growing pressures brought by increasing competition and the threat of price controls,” the latest Dentsu Global Ad Spend Forecast says.
The retail ad sector is forecast to rise 4.8% in 2023 following 10.8% growth in 2022. Increasing inflation and living costs may be hurting consumers’ purchasing power and willingness to spend. But Dentsu says as more retail brands venture into e-commerce, that will help drive up consumption and give a lift to marketing spending.
Technology remains the highest ad spending growth sector, expected to deliver a 6.8% uptick in 2023, per Dentsu, which points to the “digitalization” of business, technology products and services.
One ad category that can’t come back quickly enough for radio is automotive. Dentsu thinks automakers will spend 6.2% more on marketing next year. But that growth rate is less than half of the increase that auto companies made this year. While electric car offerings are helping to lift ad spending, Dentsu blames ongoing supply chain issues for reluctance to open the ad floodgates. “There is optimism that full capacity production will resume in 2024,” its report says.
In the company’s report, Huijboom says 2023 will be a test of determination for the ad market.
“History has already proven to us what can be achieved in tougher times, with exceptional advancements and innovation across the entire media ecosystem,” he says. “As we move into 2023, we predict that we will experience the same levels of creative thinking in plans, the emergence of new media solutions and an even greater emphasis on sustainable advertising.”