‘Forecasts on quicksand’: Ad spending slows as advertisers wade through economic uncertainty

By Seb Joseph

The economy’s decline this year has already been alarming. The big questions for many marketers are how gruelling it will ultimately become and how they can endure it.

The numbers are worrying: The World Bank has cut its forecast for global growth from last year’s 5.7% to 2.9%. And that’s just the start. The financial institution sees anaemic growth for at least the next two years, forecasting just 3% global growth next year.

But marketers are trying not to panic (too much) going into this downturn — at least yet. Not when there’s so much uncertainty around if and when the current economic slowdown becomes a full-blown recession.

What the best marketers can do (and are doing) is to make educated guesses on history and prevailing conditions. That means confronting miscalculations and redrafting plans — both of which are reflected in recently revised ad spending forecasts for the rest of the year.

Before the onset of the downturn, Zenith had predicted global ad spending to grow at 9.1% in 2022. Now, it’s been revised to 8%. It’s not a big u-turn, by any measure, but it does belie the caution that frames the mindset of many marketers these days.

As ever, ad spending concerns are a matter of perspective.

Take marketers in western markets — they are, perhaps unsurprisingly, a bit more upbeat about their prospects. Indeed, Zenith’s forecasts for North America, MENA and Western Europe this year are unchanged at 12%, 7% and 6% growth respectively.

These are, after all, countries with fundamentally strong economies; in the U.S., for example, consumer spending — aside from the lowest income levels — is still very strong.

Combine that with the fact some of the largest advertisers have come through an earnings season where performance was relatively good. Moreover, many of those same companies seem ready to have good balance sheets should the economy slide into a recession.

There are still many advertisers with enough scale and enough market share that have indicated that they will continue to invest even when times get tougher than they are now.

Chris Skinner, president of UM’s EMEA business

“It’s a polarized world where you have some businesses that are doing well despite the downturn and others that are struggling,” said Chris Skinner, president of UM’s EMEA business. “That said, there are still many advertisers with enough scale and enough market share that have indicated that they will continue to invest even when times get tougher than they are now.”

Even media owners at the coalface of the economic blowback aren’t hitting the panic button.

“The first five months of 2022 have been rather good. April exceeded everything we’d planned for, and May was also above budget,” said the digital director at a European publisher on condition of anonymity because they weren’t cleared to talk Digiday. “Currently, we are 14% up year-on-year.”

No. That growth isn’t going to be sustainable for the remainder of the year.

As the exec explained: “We’re seeing a small slow down but nothing …read more

Source:: Digiday