Ad spend around the globe will rise 8.3% in 2022, before slowing significantly in 2023, according to WARC, which in its latest report downgraded expectations for global ad market growth by US$90 billion in the face of a wider economic slowdown. These figures were presented in WARC’s “Ad spend Outlook 2022/23: Impacts of The Economic Slowdown.”
In detail, global ad spend is set to reach US$880.9 billion this year – a rise of 8.3% or US$67.3 billion. This is largely down to cyclical boosts from major events like the US midterm elections and the men’s FIFA World Cup, both taking place in November, which will animate growth for the second half. Big brands appear to plan to sustain their spend.
The new projections, based on data from 100 ad markets worldwide, amount to a downgrade of 4.3 percentage points (pp) to 2022 growth and 5.7 pp to 2023’s prospects, compared to WARC’s previous global forecast in December 2021 – a reduction of close to US$90 billion in potential growth over the two years.
● SOCIAL MEDIA’S SHORTFALL AMID SLOWING GROWTH
WARC expects the impact of Apple’s privacy measures on social media companies that rely on cross-site tracking will be in the region of a US$40 billion hit to their bottom lines over the course of this and the coming year. Most are expected to see far less growth than they are used to over the forecast period. Overall, social is expected to rise 11.5% (compared to +47.1% in 2021) in 2022 before cooling to just 5.2% - its slowest ever period of growth.
YouTube’s fortunes have also proven vulnerable to privacy changes on Apple devices: WARC believes that YouTube’s advertising revenue will rise 7.3% this year (compared to +45.9% in 2021), but that its growth will then ease to 5.6% in 2023.
● AVOD MARKET HEATS UP AS STREAMING BECOMES WAR OF ATTRITION
Advertising spend in the video streaming sector is set to grow faster than the total ad market this year (+8.4%) and next year (+7.0%). The advertising-funded video on demand (AVOD) sector is expected to rise 8.0% this year and then a further 7.6% in 2023 to reach a value of almost US$65 billion.
Broadcaster-owned streamers are also set to grow their advertising income this year (+9.7%) and next (+5.2%), but from a far lower base (reaching US$18.5 billion in 2023). Linear TV, meanwhile, will grow by 3.6% to US$180 billion (20.4% of all advertising spend) but the market is then on course to record a 4.5% loss in the absence of these events next year.
● IN CONTEXT
This is all in the broader context of inflation’s effect on consumers, which is expected to worsen over coming months. Its effects will not be equally distributed, however, with high earners expected to remain positive. In order to capture that demand, technology & electronics (+11.5% in 2023), pharma & healthcare (+7.5%) and household & domestic (+6.5%) are expected to post healthy increases in advertising investment.
“With the growth rate of global output now set to halve and acute supply-side pressures fanning inflation, the economic slowdown has removed close to US$90 billion from global ad market growth prospects this year and next," commented James McDonald, Director of Data, Intelligence & Forecasting at WARC.
“Yet brands are still spending as the Covid recovery continues, and global ad trade remains on course to top US$1 trillion in value by 2025. Platforms with rich sources of first-party data – most notably Amazon, Google and Apple – are well placed to weather future headwinds by offering measured performance in a climate where return on investment becomes paramount,” McDonald added.
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