Most marketers don’t expect ad spend drop until next year
While predictions are positive, not all actual earnings are following the plan.
Even as some companies report drops in ad spending, most marketers believe the worst is still at least six months away, according to an IAB survey.
Some 71% think U.S. ad spend will decrease within the next year. Of those, 84% expect ad spend to be it to happen in the first half of 2023. At the same time, those surveyed are scaling back expectations for this year. While they believe the total will still be a healthy 9%-plus over 2021, that’s 4% lower than they predicted in fall of last year.
This is in line with other predictions. U.S. media owners’ ad revenue is expected to grow by 11% according to MAGNA, a media intelligence company. That’s down 1.5% from what it predicted in March.
While the predictions are positive, not all the actual earnings are following the plan.
Last week, Facebook parent Meta, whose revenue comes almost entirely from ad sales, reported a 1% drop in revenue for the 2Q 2022 compared to a year earlier. It expects next quarters’ revenue to be down as well. Smaller social media companies are being hit even harder. Snap lost $422 million for the quarter, compared to a $152 million loss for the same period last year. Twitter, which is battling both the economy and Elon Musk, reported a 1% drop in revenues – which might not be notable except for its earlier prediction of 20% growth for 2022.
It isn’t just social that’s feeling the pinch. Streaming service Roku reported a net loss of $112.3 million for the quarter and said it expected a $200 million loss for Q3.
“In Q2, there was a significant slowdown in TV advertising spend due to the macro-economic environment, which pressured our platform revenue growth,” the company said in its shareholder letter. “Consumers began to moderate discretionary spend, and advertisers significantly curtailed spend in the ad scatter market (TV ads bought during the quarter). We expect these challenges to continue in the near term as economic concerns pressure markets worldwide.”
Then there’s Google. Its second quarter revenue was $69.6 billion, a 13% increase from 2Q 2021, with search advertising doing particularly well. However, even they are getting nervous. In a call with analysts, executives of parent company Alphabet used “uncertain” or “uncertainty” at least 13 times to describe the economy.
Why we care. Even though “may you live in interesting times” is not an ancient Chinese curse, we are living in interesting times, which can feel like a curse. Marketing cuts generally follow ad spend cuts. The mantra of “do more with less” may be heard in the near future. Or, it might not. The whole point of martech and marketing automation is using data to maximize results. That would be a silly thing to cut when you’re trying to protect earnings. Wouldn’t it?
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