WARC Adspend Outlook 2022/23

Andrew Neale

Ad spend around the globe will rise 8.3% in 2022, before slowing significantly in 2023 – in a major new report, WARC downgrades expectations for global ad market growth by $90bn in the face of a wider economic slowdown.

These are the figures presented in WARC’s Ad spend Outlook 2022/23: Impacts of The Economic Slowdown.

  • Global ad spend is set to reach $880.9bn this year – a rise of 8.3% or $67.3bn
    This is largely down to cyclical boosts from major events like the US midterm elections and the men’s FIFA World Cup, both taking place in November, which will animate H2 growth. Big brands appear to plan to sustain their spend.
  • Growth to slow significantly to just 2.6% in 2023
    The new projections, based on data from 100 ad markets worldwide, amount to a downgrade of 4.3 percentage points (pp) to 2022 growth and 5.7pp to 2023’s prospects, compared to WARC’s previous global forecast in December 2021 – a reduction of close to $90bn in potential growth over the two years.
  • Social media’s $40bn shortfall amid slowing growth
    WARC expects the impact of Apple’s privacy measures on social media companies that rely on cross-site tracking will be in the region of a $40bn hit to their bottom lines over the course of this and the coming year. Most are expected to see far less growth than they are used to over the forecast period. Overall, social is expected to rise 11.5% (compared to +47.1% in 2021) in 2022 before cooling to just 5.2% – its slowest ever period of growth.YouTube’s fortunes have also proven vulnerable to privacy changes on Apple devices; WARC believes that YouTube’s advertising revenue will rise 7.3% this year (compared to +45.9% in 2021), but that its growth will then ease to 5.6% in 2023.
  • Investment keeps coming
    Just four of the 18 product sectors that WARC monitors are expected to cut ad spend in 2023, but the profile and rate of the cuts is interesting: transport & tourism (-0.4%), alcoholic drinks (-1.1%), financial services (-4.5%) and automotive (-12.4%). So where is the above shortfall coming from? Small and medium sized businesses are big spenders on social advertising, and as they are hit hard they will struggle to spend.
  • AVOD market heats up as streaming becomes war of attrition
    Advertising spend in the video streaming sector is set to grow faster than the total ad market this year (+8.4%) and next year (+7.0%). The advertising-funded video on demand (AVOD) sector – including Hulu, Amazon Prime Video and YouTube – is expected to rise 8.0% this year and then a further 7.6% in 2023 to reach a value of almost $65bn.Broadcaster-owned streamers are also set to grow their advertising income this year (+9.7%) and next (+5.2%), but from a far lower base (reaching $18.5bn in 2023). Linear TV, meanwhile, will grow by 3.6% to $180bn (20.4% of all advertising spend) but the market is then on course to record a 4.5% loss in the absence of these events next year.

You can read a sample here. WARC Media subscribers can access the full report here.

This is all in the broader context of inflation’s effect on consumers– see WARC’s Economic slowdown and inflation hub for our full coverage – and which is expected to worsen over coming months. Its effects will not be equally distributed however, with high earners expected to remain positive.

In order to capture that demand, technology & electronics (+11.5% in 2023), pharma & healthcare (+7.5%) and household & domestic (+6.5%) are expected to post healthy increases in advertising investment.

Sourced from WARC Media

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