Dentsu downgrades 2023 adspend forecast again
Dentsu expects that 2023 will be “a flat year for advertising” and predicts global adspend to grow by $23bn in 2023 to reach $729.9bn.
The agency network behind Carat and iProspect said that media price inflation rather than increasing advertising volume will drive growth this year, and forecasts global growth will slow from 7.9% in 2022 to 3.3% this year.
This is the second time Dentsu has adjusted it 2023 forecast downwards, having predicted in May 2022 that growth would be 5.4% before revising the figure downwards to 3.5% in December. The company said the further downward adjustment is due to macroeconomic factors, in particular highlighting turbulence in financial sectors, the war in Ukraine and global inflationary pressures.
Despite the more lacklustre 2023 forecast, the report has predicted that global adspend will bounce back in 2024, with growth rising at a pace of 4.7% to reach $762.5bn. Advertising markets globally will be boosted by major sports events such as the Paris Olympics and Paralympics, as well the Uefa European Football Championships Euros and the US presidential election.
Breaking the forecast down by media, Dentsu predicted that global spend on digital will grow by 7.8% year-on-year, adding $30.6bn to reach $424.3bn by the end of 2023. While growth in digital is more than double the rate for the total market, digital has only fallen short of double digit growth twice in the last 20 year — in 2009 due to the global financial crisis and during the pandemic in 2020.
The agency network forecasts, that digital’s share of adspend is expected to increase by a percentage point every year until 2025, starting at 58.3% and reaching 60.3%.
Dentsu also forecast disappointing results for ad spend on TV. According to the report, spend on TV will decline by 3.1% in 2023. The report attributes the slow in spend to declining audience numbers and inventory, combined with economic uncertainty. Dentsu does predict a positive Q4 2023 for the TV market, and that advertisers are postponing investment to later in the year.
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The report stated that TV is fast becoming a digital channel and that “given its potential convergence with other forms of online video and the viewer’s ability to watch on all types of digital screens, advertisers expect the same level of measurement and accountability, from targeting and delivery to response and results.”
In terms of specific regional markets, Dentsu predicts that adspend will grow fastest in Asia Pacific in 2023, followed by the Americas and then the EMEA region. The United Kingdom is the largest advertising market in Europe, the Middle East and Africa and is expected to also be fastest growing, with adspend expected to rise by 3.1% to reach $42.4bn. Dentsu previously predicted a growth of 3.6% last December.
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According to Dentsu, economic headwinds has caused advertised to shift gears to pursue performance media over investing in brand.
Last week, ITV announced it will offer advertisers a free ad campaign measurement service as part of a range of measures designed to help advertisers prove the effectiveness of TV’s contribution to a brand’s sales.