Economic turbulence hits Dentsu’s ‘growing but slowing’ ad spend forecasts for 2023
Ad giant predicts that $740.9bn will be invested in advertising next year, compared with $713.6bn over the course of 2022.
The global freeze on ad spend has the industry predicted to hibernate in 2023 before coming back to life in 2024 and beyond / Jason Mitrione
Global ad spend growth is set to cool significantly next year, per the latest forecasts from Dentsu, which paints a picture of an industry still 'growing but slowing'. The advertising giant predicts that overall global ad spend will increase by 3.8% in the face of significant headwinds – less than half of the overall growth in 2022.
Dentsu anticipates that $740.9bn will be invested in advertising next year, compared to $713.6bn over the course of 2022. Additionally, the report suggests a significant proportion of the growth in 2023 will be driven by media price inflation, while ad spend at constant prices is predicted at –0.6%.
That retreat is blamed in part on rising inflation and political uncertainty, leading to recessions and slowing consumer spending. It falls in line with many expectations about the health of the marketing industry over the next few years, though Dentsu does predict further 4.5% growth into 2025.
Peter Huijboom, global chief executive, media and global clients at Dentsu International, said: “2022 has proven to be another strong year of growth for the ad industry, despite the political and economic uncertainty that surfaced. It is clear from our report and forecast the effect of this is being felt into 2023 too, and we need to be realistic on how this will impact the industry, the inventory, and the returns we should expect from available budgets.”
Unsurprisingly given recent trends digital ad spend is set to be more resilient than some other advertising mediums. The report suggests that digital will receive a 57.1% share of the ad spend planned for 2023 and 58.2% in 2024.
More traditional advertising mediums will see their long-term trends continue. TV spend is expected to grow by 0.2%, reaching $182.7bn, with modest gains also expected in out of home (2%), cinema (6.1%) and audio (2%). Ad spend in newspapers and magazines will continue to decline by -3.6%, but the report does note that online news and magazine spend are benefiting from digital growth, as publishers continue to divest traditional paper formats.
Huijboom said: “With the increased business focus on immediate gains to help ride out this temporary economic slowdown, we should expect to see more performance campaigns prioritized, which in turn will impact the channel mix. This is likely to be one of the main reasons we are seeing such strong growth in digital in the short term.”