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Advertising investments should grow 5% this year, according to a new industry forecast released today by analyst Brian Wieser.
Marketers and advertisers should regard this relatively modest growth as a return to normal, pre-pandemic economic conditions. Since ecommerce boomed during the pandemic and led to increases in retail media investments and other online direct-to-consumer sales, the advertising industry benefited. Marketers largely felt that sustaining high growth would be unsustainable in the long term.
While it’s true that 5% is a slowdown from last year’s 6.5% growth, marketers can consider Wieser’s 5% estimate to be positive news, he argues in the forecast report. Other industry players will find the forecast presents a not-so-rosy outlook. Categories like traditional publishing and TV advertising will, predictably, face modest declines.
Wieser is the founder of advertising investor consultancy Madison and Wall, and most recently led business intelligence practices at GroupM, WPP’s media agency collective. GroupM releases its own advertising forecasts, which Wieser managed during his tenure there; its mid-year advertising forecast expects 2023 growth to be barely higher than Wieser’s, at 5.1%.
The analyst’s independent forecast—the first of its kind—projects advertising investments through 2028, combining annual data dating from 2016 with quarterly data dating from 2018. The forecast projects growth across 20 media types, from publishing to retail media and TV. It also separates how much is invested in digital-only publishers relative to traditional print publishers. To reach his conclusions, Wieser analyzed publicly available data and approximately 80 company earnings reports.
“The first half [of 2023] was up against very different comparables,” Wieser told Adweek. “By the fourth quarter of 2022, we basically had no growth. Many advertisers effectively talked themselves into a downturn.”
What’s driving the ad industry?
Ad industry growth skyrocketed during the pandemic, especially in the retail media category. There was a surge in ecommerce activity as consumers abandoned in-person shopping, and quarantine mandates pushed even the digitally averse to adapt to online shopping.
Other anomalies contributed to the boom, including more Chinese advertisers marketing to U.S. audiences; the introduction of self-service tools that make it easier for small businesses to buy their own media en masse; and a more competitive ecommerce environment as a variety of DTC online businesses went up against traditional CPG companies.
All of it contributed to double-digit growth, and some of these factors will continue to be boons.