Dentsu downgrades spend forecasts and points to media inflation-driven growth

Dentsu downgrades spend forecasts and points to media inflation-driven growth

Dentsu expects global ad spend to grow by 3.8% in 2023, amounting to $740.9bn.

Though the forecast points to continued growth, Dentsu expects it to come at less than half the pace seen in 2022 (+8.0%).

The projections amount to a downgrade; Dentsu previously forecast that global ad spend would grow by 8.7% in 2022 and 5.4% in 2023.

The report cites factors including rising inflation, increased interest rates, market recessions, continued political uncertainty and the resulting impact on business and consumer spending as reasons for slower expectations for the year ahead.

In top spending markets (USA, China, Japan, UK, Germany, France, Australia, Brazil, India, Canada, Italy, and Spain), Dentsu expects a “significant” proportion of the growth in 2023 to be driven by media price inflation. At constant price, ad spend is predicted to decline 0.6% next year compared to 3.4% growth at current prices.

According to Dentsu’s forecast, regionally the projected slowdown will be felt the strongest in the Americas, which is expected to grow 3.7% in 2023 compared to 13.2% in 2022.

The forecast is less sunny than GroupM’s and Magna’s previously released forecasts, which are expecting 6.5% and 5% global growth, respectively. Neither report flagged that a “significant” degree of growth will be driven by price inflation, though GroupM also noted that anticipated inflation in many markets, including the UK, would likely outpace the rate of ad revenue growth.

Dentsu International global CEO of media and global clients Peter Huijboom commented on the report, saying: “2022 has proven to be another strong year of growth for the ad industry, despite the political and economic uncertainty that surfaced. It is clear from our report and forecast the effect of this is being felt into 2023 too, and we need to be realistic on how this will impact the industry, the inventory, and the returns we should expect from available budgets.”

Breaking the share of ad spend down by channel, Dentsu expects digital spend to reach $422.8bn by the end of next year, accounting for 57.1% of all global spend. Modest gains are also anticipated next year for cinema (+6.1%), audio (+2.0%), out-of-home (+2.0%), and television (+0.2%). Traditional print is expected to further decline -3.6%.

Huijboom added: “With the increased business focus on immediate gains to help ride out this temporary economic slowdown, we should expect to see more performance campaigns prioritised, which in turn will impact the channel mix. This is likely to be one of the main reasons we are seeing such strong growth in digital in the short term, taking it up to 57.1% of all spend in 2023.”

How we should treat GroupM, IPG and Zenith forecasts

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