The holiday season provides a brief reprieve from the ad downturn

The news: The ad spending downturn has been hard on the industry, but some brands are finding opportunity in the decline.

• The number of advertisers who said they’re pausing or reducing ad budgets fell from 49% in August to 41% in October, per Advertiser Perceptions. While half of respondents said that interest rates were having a negative impact, 20% said they’re having a slight or major positive impact.

The end-of-year turnaround: Advertisers have the holiday season to thank for much of the renewed ad spending.

• But despite the holiday boost, much of that spending isn't going to upper-funnel channels like TV. Instead, many are spending on search and sponsored products in order to capitalize on spending-conscious consumers.
• That pivot to direct-response spending means that smaller brands have a unique opportunity to claim space on upper-funnel channels. Industries known for high ad spend like insurance and automotive are pulling back, leaving room for smaller brands to build awareness.
• “Brand advertisers may face less competition for display and video ads, finding more cost-effective ads that can drive awareness and consideration over the extended shopping period,” Insider Intelligence principal analyst Andrew Lipsman wrote in our 2022 Holiday Shopping Report.

Our take: The second half of 2022 has been marked by major declines. The decline of advertising spending, of social media, and of consumer spending. But smaller or mid-size companies that manage to strategically navigate the current ad environment could find themselves in a much better position once the air clears.