According to new reports, including one from Axios, growth in global ad spend is anticipated to be slower in 2023 than was previously expected. This is based on two new forecasts, and it could be a red flag for media and tech firms that rely on advertising revenue.
With 2023 likely a year where economic uncertainty is going to be driving most decision-making, it’s a good time to think about working on organic marketing strategies. Questions to ask a branding company might include how you can create brand awareness while still being mindful of your ad spend if you’re tightening your budget to deal with various economic factors.
The following are some things to know about forecasted ad spending in 2023 and what you might be able to expect.
Advertising revenue is expected to hit $833 billion in 2023. That will be up around 5% from 2022, which saw around $795 billion in spending. The expected growth rate, however, is 1.5 percentage points lower compared to a Magna forecast from June.
The downturn is something the company says is due to the macroeconomic environment.
There was also a 7% increase in the growth rate of global ad revenue in 2022, so the growth rate is down substantially in forecasts.
Spending slowed quite a bit in the second half of 2022, but full-year advertising sales grew. A lot of that is attributed to big-ticket events, like elections in both Brazil and the U.S., and sports events, like the FIFA World Cup.
For U.S.-based advertisers, the prediction is that 2023 could be a slow year. There’s a lack of both cyclical and political ad spending for 2023.
The Magna ad agency is predicting that long-form video advertising will likely drop year-over-year by around eight percent. Out-of-home media may grow, but audio advertising could be flat.
Magna forecasts that ad spend growth will be best in media/entertainment, travel, and betting. They also believe that automatic ad spending will increase as supply chain issues hopefully get better.
Marketing During a Recession
While ad spend growth may be expected to decline in 2023, it’s important for businesses to realize how important advertising and marketing as a whole remain, including in a recession. Analysts are back and forth on whether or not we’ll enter a recession in 2023, but even if we don’t, it’s likely that businesses are going to want to tighten their belts.
One research analyst recently said the likelihood of a global downturn is around 98%.
If you’re in charge of marketing budgets, don’t panic. History shows us that a combination of the right marketing strategy and innovation can mean the difference between thriving and failing in an economy that’s uncertain.
When you’re in the midst of economic stress, it’s more important than ever to engage with your customers, especially your most loyal customers. When you’re strategic with your advertising and marketing spending, you can keep up your brand conversation, despite the tight market.
Marketing and advertising during a recession are about priorities.
In one report from Analytic Partners, 60% of brands that increased their media spend during the last recession saw greater ROI. The ones that paid more on advertising saw their incremental sales go up 17%.
During economic uncertainty or recessions, you need efficiency in your campaigns. They need to be impactful and highly targeted, with an emphasis on value. You might be re-evaluating your price points, and you want to make sure that your messaging is going to be in line with any changes you make.
A value-based approach to your messaging will help you build and keep a connection with your customers.
You can use challenging times to build a sense of trust with your brand that’s going to propel your relationship with loyal customers beyond just your product or service.
The Importance of Customer Loyalty
During 2023, as you’re building advertising and marketing budgets and making plans, customer loyalty should be top-of-mind.
You want to reinforce your commitment to your best customers and build a sense of transparency and trust.
When you acknowledge hard times at the same time as you’re focusing on your loyalty programs, it’s an ideal mix for customer relationships.
Additionally, research shows those customers who engage in loyalty programs and self-identify as brand fans tend to be less price sensitive and will spend more with that brand. This can be a make-or-break in an economic downturn.
Other Marketing Tips During an Economic Recession
You’ll need to start reviewing advertising spending now and keep in mind the potential for a recession.
Don’t approach it from the perspective of austerity, however. Approach it with a mindset of reallocation.
When the economy is declining, you have to remember the ad market actually becomes less competitive since businesses that aren’t necessarily forward-thinking are, in fact, cutting their budgets.
You can review your allocation for your ad budget and then start to figure out how to best redirect money to the platforms that are going to give you a higher ROI for your marketing. Since you’re likely going to get a higher share of voice, you might see benefits that you didn’t even in better economic times.
You might also want to think about adding to your budget for advertising if you want to reach a larger audience with more premium ad space.
Regardless of how you reallocate your budget, you have to make sure everything you’re doing is highly targeted. You need to optimize your marketing and ad campaigns so that you’re targeting those prospective customers with high buying intent. When marketing to customers who have already started the buyer’s journey gives you more leads and is more cost-effective.
We don’t know how 2023 will shape up in terms of businesses and how they advertise, but we do know that we’re in the post-Covid-19 period, which is marked by supply chain disruptions and lingering effects of fiscal policy. Smart businesses recognize this and the challenges that it can bring and are planning accordingly.