Commentary

GroupM Drops New Evidence Of Disconnect Between Economy And Ad Spending

Anecdotal evidence continues to mount of a disconnect between the growth of the general economy and advertising’s.

And it once again comes from GroupM’s business intelligence team, which has arduously been sifting through insights – and indicators – disclosed in various publicly traded media and brand-marketer earnings calls, as well as some supplemental sources of data it’s been analyzing.

While analysts, pundits and media continue to focus on negative signals in what is expected to be a recession, “we're still not there,” GroupM’s Brian Wieser points out in this week’s installment of the “This Week Next Week” podcast he co-hosts with Kate Scott-Dawkins, who added that while there are some negative signals coming out of recent big marketer earnings calls, “consumer balance sheets” remain “relatively healthy” and above pre-pandemic levels, and U.S. jobless claims are “still quite low.”

“We’re still in this period of it’s good, but it’s bad. But it’s not-so-bad, but it’s not-so-good,” Scott-Dawkins quipped.

Specifically, Wieser called out analysts and journalists for focusing on the not-so-good -- including Snap’s week earnings, which its management attributed to cutbacks by advertisers, as well as Procter & Gamble’s earnings call statement that it will be spending less on advertising as an austerity move.

Wieser said GroupM has not been seeing signs of big advertisers cutting back materially in ad spending, and that even with P&G’s statement, there was corresponding news from Nestle that it was actually increasing ad spending.

“I don’t know that that got as much press pick-up,” Wieser groused.

“It’s almost like they prefer to report bad news,” Scott-Dawkins concurred.

But the strongest indicator of sustainable advertising growth amid weakening economic signals continues to be GroupM’s thesis about an underlying  “creative destruction” that has been taking place as new kinds of digital endemic advertisers displace older legacy brands.

It’s “the reason why there can be a disconnect – or a meaningful disconnect – between economic growth and advertising growth,” Wieser explains, adding: “Where if an economy produces brands that are disproportionately likely to spend money on advertising to replace brands or companies that were proportionately less likely to spend on advertising, you get growth.”

This week’s evidence comes from an analysis Scott-Dawkins did of new data from Ad Age ranking the top 20 U.S. advertisers, and the fact that high-growth “digital endemics” like Airbnb, Coinbase, Booking.com, and Google have been displacing legacy likely fall more in the not-so-good advertising bucket.

1 comment about "GroupM Drops New Evidence Of Disconnect Between Economy And Ad Spending".
Check to receive email when comments are posted.
  1. Craig Mcdaniel from Sweepstakes Today LLC, October 24, 2022 at 6:07 p.m.

    Over 18 years, I make the judgement about the state of advertising on the number of sweepstakes we publish through October and November and the amount of prizes measured in ARV or Approx. Retail Value. While this might sound different to many, over 95 percent of the major advertisers use sweepstakes in their advertising campaigns. Christmas season starts in September and ends in December. For 2022, I am seeing about a 10 percent reduction in the number of sweeps. The current ARV is down closer to 20 percent. Yes, this is a different way of measuring annual advertising, but it has proved actuate over many years.

Next story loading loading..