Digital growth plateaus amid continued ad spending declines

• National ad spending dropped 6% year-over-year in January, extending a monthslong decline, in line with a report that Standard Media Index (SMI) shared with Marketing Dive. 
• Among product categories, consumer packaged goods (CPGs), pharma and travel each saw increases in spending YoY. Tech, entertainment and media, and wellness all faced sharp drops. 
• Traditional ad spending also decreased throughout the month, while investments in digital channels were relatively flat. A sluggish begin to 2023 could reflect ongoing macroeconomic challenges which have led some marketers to be more conservative with their budgets. 

SMI’s latest findings suggest promoting is off to a bumpy start this yr, a possible reflection that economic issues like inflation are keeping brands in belt-tightening mode. Still, not every thing was doom and gloom for January. The month’s total take was the second-best on record tracking back to 2017, in line with SMI. 

Though January saw a drop in traditional ad spending and flattish digital growth, progress was made on certain fronts. A November SMI report saw digital spend actually decline for the primary time since July 2020. SMI captures actual agency invoicing data that represents about 95% of the general national brand ad spending, the corporate claims.

Within product categories, the travel sector saw the biggest YoY increase in spending of 19%, a continued bounce back from pandemic lows. Behind travel, CPG had the second-highest YoY growth of 16%, followed by pharma (15%), auto (9%) and restaurants (2%). The remaining categories all faced declines, including apparel and accessories, general business, retail and financial services. Among the steepest declines, entertainment marketing and technology each fell by 23% YoY and wellness fell by 37%. 

As most of the difficulties from 2022 persist, including a war, inflation and fears of a recession, many are short on optimism for the yr ahead. According to a survey from the National Association for Business Economics, 58% of economists imagine the likelihood of a recession inside the following yr is more likely than it will not be. Such an anxious atmosphere could see advertisers proceed to clench their wallets.

Conversely, the situation could brighten up down the road if market tensions ease. Ad spend is anticipated to grow 6% to $509 billion in 2023, in line with an earlier report from the Winterberry Group.