Dentsu’s latest ad report shows slowed growth, driven mostly by inflation

Global advertising is expected to grow to $727.9 billion, a somewhat anemic 3.3% over 2022, and down from 3.5% that had been forecast last December by Dentsu. Back then, total ad spend was forecast to hit nearly $741 billion.

Contributors to the softened growth projections are diminished ad-spend growth from high-volume ad categories such as automotive (whose ad growth in 2022 was 16.5 % percent and in 2023 will be only 5.3%), pharmaceutical (slowing from 16.2% growth to 4% in 2023) and travel/transport, (slowing from 46% growth to just under 5% in 2023).

The only two categories expected to increase ad-spend growth in 2023, according to the report, are cosmetics/personal care and telecommunications — and both of those are still forecast to grow ad spend less than 5%.

The region with the largest percentage growth is Asia Pacific, at 4.6%, followed by the Americas at 2.9% (the U.S. specifically is projected at 2.6%) and EMEA the laggard at 1.9%. Actual ad spend at constant prices actually dropped 0.6% according to the report, with inflation responsible for any rise, according to the report.

Broken down by halves of the year, second-half 2023 will see an uptick in spend of 4.1%, boosted by multinational events including the Women’s World Cup.

“In marketing there is currently a big push for transformation beyond the digital transformation of recent years to something much more fundamental: transforming businesses into effective entities that can survive another ten years in rocky conditions, built on technology and people intelligence, with data, sustainability and purpose at the heart,” wrote Huijboom in the report. 

For only the third time this millennium, digital advertising is expected to grow by single digits,(once in 2009 and also in 2020) or 7.8% to $424.3 billion, the report forecasts. And for the first time, growth is expected to stay at single digit percentages the next two years. Still, digital accounts for 58.3% of all ad spend globally. 

“Whilst display growth is slowing and direct/traditional insertion order buys are declining in 2023, we expect to see continued rapid growth for the emerging digital categories such as retail media (18.0%) and connected TV (15.2%), and for ad inventory transacted programmatically (14.4%),” wrote Huijboom. 

Search is also one of the stronger areas of digital growth, with Dentsu forecasting 8.9% growth, thanks in part to the injection of artificial intelligence into modern search products.

As far as other media sectors, Dentsu predicts total TV spend will drop 3.1 percent to $170.2 billion from 2022 levels, despite continued interest from advertisers in connected TV. Huijboom said he expects streaming services to compete more intensely for rights to live sports, given that it remains the last bastion of attracting mass audiences with demographic value. Huijboom expects TV growth to return in 2024 to 4%. 

Out of home is forecast to grow by 3.8% this year (a lesser growth amount than other forecasters put it) while print continues its inexorable backward slide of a 4.8% slide and audio just holds onto a slim growth percentage of 0.8%.