Although the first half of 2022 may have taken a toll on most public media companies, with reported slowdowns in ad revenue growth and some posting revenue declines vs. 2021, media sellers should see more signs of a turnaround this fourth quarter.
Based on the results of an Advertiser Perceptions survey of 200 U.S. advertisers, 84% said their ad goals are unchanged from the start of the year, with many prepared to move forward with spending. “Advertisers are very much showing signs of acceleration and willingness to finish the year strong,” Advertiser Perceptions General Manager, Business Intelligence Lauren Fisher says. “In spite of continued economic impacts, we’re predicting a strong, even competitive Q4 2022.”
The results of the July 2022 survey show that one in three advertisers impacted by supply chain constraints that led to spend reductions or pausing spending were ready to restart budgets as soon as these effects subside, with an additional three in 10 expecting to do so in fourth quarter. More than half that cut spend due to inflation also foresaw restarting budgets either as soon as impacts are no longer felt, or in Q4. Overall, one in five advertisers predicted they'd bring spend back for the holidays.
One good reason to do so? Increased consumer retail spending. Fisher cites August retail sales data from the Census Bureau showing consumer spend up 10.4% year-over-year, and up 30% compared with 2019 levels. “Consumers have not decreased spending, in fact, they’ve increased it,” she says. “With gas prices continuing to decline, and inflation rates remaining flat from June to July, there’s strong reason to think that this will be another important Q4.”
Advertiser Perceptions' report notes that while consumer spending is up, it has shifted toward products with lower price tags, vs. high-ticket items such as electronics and furniture. “This has two implications for media companies,” Advertiser Perceptions Director, Business Intelligence Eric Haggstrom says. “Major retailers are sitting on excess inventory, which could have a positive effect on media spend as retailers look to increase demand and clear their warehouses out, or a negative effect if retailers want to preserve their margins. Regardless, there’s every indication that consumers will continue to spend, and smart advertisers will be leaning into that sentiment in Q4.”
To attract these advertisers during a budget resurgence, Haggstrom says, “media sellers and ad tech firms must be ready to meet advertisers with a clear plan for achieving their Q4 targets.” Based on another Advertiser Perceptions survey conducted earlier this year among 460 U.S. marketers and advertisers, the top five factors making a media company good to do business with are service and support (including consultative recommendations), industry leadership and brand reputation, scale and reach, ad offerings (including quality inventory and a differentiated array of ad formats) and results/return on ad spend (ROAS).
“For media sellers and ad tech partners, helping advertisers to smartly invest restarted ad budgets or expand existing budgets will be critical to keep up with Q4 demand,” Advertiser Perception's report says. “Again, it comes down to more than service and availability – actively feeding clients insights and recommendations are now a must, as is a product that can deliver the right audiences and the right results.”