Wieser wrote that there’s been a lot of baseless concern of a recession, which has caused pockets of agency layoffs and marketers in certain categories including auto and tech to be cautious with their ad spend. As it relates to ad revenue, Wieser wrote that he expects there to be “a reversion back towards the lower end of mid-single digit levels, which should be considered normal, positive conditions for the industry,” coming off of a “period of massive expansion during the pandemic” in 2020.
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“It could be considered a positive that the industry didn’t fall faster, or even decline over the past year and a half, especially as much of the industry seemed to try to talk itself into a downturn last year by fearing for a recession that never came,” Wieser wrote. “I would argue such an outcome was never even likely to occur in the first place given the vast stores of savings for wealthier consumers and significant disruptions to labor markets which empowered workers—including those with lower wages—to secure higher levels of compensation.”
Even the rise in inflation should boost the overall ad market, Wieser argued.
“Most marketers I have studied manage their budgets for advertising on a percentage-of-revenue basis,” he wrote. “Higher revenue, whether driven by higher prices or higher volumes, should almost always lead to more spending on advertising, unless there is a meaningful decline in underlying economic growth.”
Ad revenue is expected to normalize in the range of 4% to 5%, excluding political advertising, on a quarterly basis in 2023, per the report.
Areas on the rise
Digital advertising continues to rise in importance for marketers looking to better boost and track the performance of their ad dollars.
What the report called “Internet/Digital Platforms”—a category including search, social media, commerce, retail media and other digital platforms such as YouTube, Yahoo and Apple—is expected to account for 64% of all advertising spend in 2023 and nearly 67% by 2024. The report predicted digital platform-focused companies to collectively grow by 11% in 2023.
“Perhaps unsurprisingly, commerce media [and] retail media is a stand-out sector, set to account for approximately $42 billion in advertising revenue during 2023, up 20% from 2022 levels,” Wieser wrote.
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Amazon continues to be the dominant player in the commerce and retail media space but “companies such as Walmart, Instacart, Ebay, Uber, Criteo, Booking.com and Expedia have all built significant businesses which are collectively well-positioned to sustain double-digit growth for many years to come,” he wrote.
Even political advertisers, which have historically invested more in traditional forms of marketing, will lean more into digital advertising, the report predicted. “Internet-related advertising has become increasingly important, and as this category continues to grow, its year-over-year skews to growth rates will become increasingly evident,” Wieser wrote.
Outdoor advertising is another area poised for growth, as people are increasingly getting out and about following the height of the pandemic. Wieser predicted this as the only “traditional” media expected to grow in 2023.
“Outdoor advertising has essentially rebounded back to pre-pandemic levels,” he wrote. “Arguably led by technology-focused companies such as Apple and luxury marketers, it was already the case that prior to the pandemic outdoor advertising was lauded for its experiential qualities. In a world where television looks significantly less attractive, outdoor advertising probably looks even better by comparison.”