While many macroeconomic factors — especially a recently plunging stock market, rising inflation and recessionary concerns — continue to drive sentiment about the direction of the advertising economy, there are underlying signals suggesting that advertising continues to expand despite them.
That was my takeaway listening to GroupM’s Brian Wieser and Kate Scott-Dawkins read their most recent tea leaves during the episode of their “This Week Next Week” podcast that dropped late on Friday.
The co-hosts covered a number of bases, which I will get into momentarily, but even though they buried their own lead — teasing their release of GroupM’s “Ecommerce & Retail Media Forecast” — there’s no reason I should.
“From initial conversations, I think people are going to be interested in just how big it already is as a percentage of global ad revenue already,” Scott-Dawkins says, tipping their hand at the very end of the podcast.
As someone who got an early press preview of the report, I can’t comment further until the embargo lifts tomorrow morning, but I can say I agree with Scott-Dawkins' sentiment.
The only other thing I’ll add in this morning’s column is that, after following Wieser’s economic forecasting for years, and becoming a devoted fan of the podcast, I’ve come to agree with their view that the advertising economy is increasingly becoming disconnected from the macroeconomy, and that there may be good, sustaining news for advertising when you look below the top lines.
And the reasons for that is that advertising – and marketing services overall — still are the fuels that drives economics for many companies and industries and that given how fragmented that has become — there are now more than 12 million brands marketing to consumers worldwide — there’s a lot of opportunity to hedge for advertising growth even when macro indicators are pointing downward.
The report GroupM is releasing tomorrow — especially the section sizing the dimensions of the retail media industry through 2027 — is just one of them.
And while that is new news, the cohosts touched on some recurring themes on this subject that indicate a bullish outlook for ad spending.
One of them came out of Wieser’s breakdown of recent Congressional hearings related to the Twitter whistleblower news, including Senator Josh Hawley’s grilling of TikTok COO Vanessa Pappas. No, not the national security part about TikTok giving access to American user data to Chinese Communist Party operatives, the part about how many Chinese marketers are advertising to American consumers on the platform, as well as on Twitter.
Wieser said he was struck by “Senators expressing concern about the number of Chinese advertisers on Twitter” when Twitter isn’t even available in China.
“And that shock to shocks, there is spending by Chinese advertisers on Twitter,” Wieser mocked, adding: “Do we know anything about this topic?”
Wieser, of course, was alluding to his own tracking of the Chinese advertiser spending on Facebook, which at last count was adding more than $10 billion annually (with “many billions more” on Amazon, Google, etc.) to the U.S. ad economy.
Describing the phenomenon as “transported advertisers,” Wieser noted that far from the nefarious concerns of Congress, the Chinese advertisers are actually bolstering the U.S. ad economy.
“Most if this is just selling low-cost products. It’s innocuous,” he said, adding, however: “But the concern isn’t going to go away.”
The bottom line from this week’s episode, as well as the GroupM team’s ongoing tracking of the relationship between the general economy and the ad industry’s is they aren’t necessarily connected in the ways you may think. Which is also one of the reasons Wieser and Scott-Dawkins remain bullish for advertising, despite the growing negative economic sentiment.
“Economic conditions do not by themselves dictate advertising,” Wieser noted, adding, “but obviously they do set the environment by which our expectations for advertising growth are informed.”