The news: 2022 was a historic year for advertising. The pandemic-driven boom in impressions slowed down, prompting a dramatic pullback in ad spending that many were unprepared for. But out of the downturn, new trends and leaders are beginning to emerge.
Don’t be fooled by the panic: While slower than expected, ad spending still grew in 2022, , and will continue to grow moving into 2023. GroupM is forecasting a 5.9% increase in 2023, down from 6.4% in June. Magna had a steeper drop of 6.3% to 4.8%. Our own October forecast predicts growth of 6.9% to $929.95.
The big downturn: An adjustment from pandemic-level highs collided with economic uncertainty and persistent issues with advertising addressability to throw the ad industry into disarray, disrupting long-established norms.
- Advertisers became precious about their budgets, causing long-time relationships to falter. Automakers, for example, one of the top TV advertisers, reduced budgets for months in a row and instead pivoted to post-purchase and direct-to-consumer advertising.
- It wasn’t just old relationships like automakers and TV that suffered. Companies pulled social media spending dramatically as a response to customer distaste for the ad channel and issues with social media addressability brought on by Apple’s AppTrackingTransparency policy.
- These dramatic shifts led to significant changes in advertising spending forecasts. We cut our social advertising forecast by an unprecedented $9.25 billion. The long-term outlook shrank as well: We now expect social advertising to reach $79.28 billion by 2024, down from $99.92 billion.
The staples: Amid all this, some advertising channels proved resilient.
- Search advertising is the best example, and will account for 28.6% of total ad revenues in 2022: Advertisers shifted more of their budgets toward search, an essential if unsexy way to ensure that limited budgets have the greatest impact.
- The stalwart effectiveness of search marketing kicked off a race in Big Tech to capitalize on search revenues. Microsoft, Apple, and others made aggressive pushes into the search marketing space in order to capture revenues from the titans Amazon and Google.
- Even though advertisers were less likely to spend on unproven channels, one relatively new trend thrived: retail media networks. Eager to capture growing search revenues, countless retailers from Michaels to Instacart launched ad networks, and the market is rapidly surging. US retail media ad spending will grow 25.8% next year to $51.36 billion, making up 18.1% of total US digital ad spend.