What downturn? In real terms, ad spending is doing just fine

What downturn? Ad spending is doing just fine

The latest forecasts and financial updates are in and one thing is clear for ad spending this year: It isn’t speeding up but it isn’t slowing down much either.

This is what a correction looks like.

And it looks a lot more nuanced than the so-called downturn that overshadowed a lot of advertising at the back half of last year. Really, that was a precursor to a reversion to the mean (i.e. pre-pandemic levels). That’s not to say there haven’t been some real cutbacks in spending so far this year. Of course there have been. But those cuts were isolated rather than widespread.

In fact, advertising appears to have held up quite well considering how much the ad industry talked itself into a downturn toward the end of 2022.

Google, the largest seller of advertising, posted constant currency ad revenue growth during the first quarter of 3% compared to the same period a year ago. Meta was up around 7% over the same period, while ad spending on Microsoft grew around 6%. Meanwhile, spending on Amazon grew at 23% year over year during the period. As ever, ads do better the closer they are to transactions.

“My thinking was — and remains, after the results we’ve seen so far — is that advertising should probably be up mid-single digits this year,” said Brian Wieser, media analyst and author of the Madison and Wall newsletter. “So you could argue that’s like a pre-pandemic level, albeit with a boost from inflation.”