March Marked 9th Straight Month Of Ad-Market Spend Decline, Tinuiti Reports

The advertising market continues to soften. March marked the ninth straight month the ad market declined, according to a report released Wednesday.

Tinuiti on Wednesday released the Q1: Media Landscape in Review report, which shows March 2023 marked the ninth straight month that ad spending declined -- falling 8.4% compared with the year-ago month.

February faced tough times too, with ad spend down 8.04%, year-over-year (YoY).

The report is an aggregate account of industry information and data pulled from its own systems and clients. 

Devin McGaughey, chief solutions officer of Streaming+ at Tinuiti, said it's the end of the good times for streaming.

"The focus now is on how businesses become profitable, so we're seeing a lot of changes on how companies manage ad buying," he said. 

Marketing research and consulting firm Magna revised its 2023 U.S. ad-spending growth projection down from 3.7% to 3.4%, but expects a pick-up in investment in the second half of the year driven by ad-supported video streaming.

While consumers have pulled back a bit for the last few months, consumption is above trend—the pre-pandemic trend line would have put March’s total consumption at just over $500 billion, while the actual figure was just under $600 billion, according to the report.

One of the more difficult challenges for brands that has put pressure on advertisers, the loss of deterministic user-level data for targeting ads. In response to this challenge, initiatives such as the Android Privacy Sandbox and Total Cookie Protection have emerged. These developments aim to address the growing concerns surrounding user privacy while maintaining a balance between targeted advertising and respecting individual privacy rights. Chrome is slated to block all third-party cookies in the third quarter of 2024.

Retail sales grew 3% in January -- the largest gain in almost two years -- but then slid in February and March, once again surfacing worries of a cooling economy as the labor market experiences a slowdown and indicators suggest labor demand is weakening.

Consumers met the initial introduction of advertising in ad-free premium video by Netflix and Disney+ with slow adoption rates, despite Netflix’s Basic with Ads tier gained ground, generating more revenue per subscriber than the ad-free Standard tier.

It initially appeared that Disney+ did a much better job of attracting customers to their ad-supported tier. Netflix captured only 9% of new sign-ups in the first month, while Disney+ captured 15%, according to Tinuiti. In the third month from launch, Netflix improved on this, but was still outpaced by Disney+.

Content licensing is back. Publishers are shifting focus toward revenue rather than subscriber growth, and some streaming companies are exploring content licensing to make up for mounting financial losses. Tinuiti suggests this change coincided with indications that near-saturation was a problem in the American market, with churn increasing even as consumers continued to accumulate subscriptions.

In February, Warner Bros. Discovery signed deals with Roku and Tubi to make its library content available to consumers through FAST platforms, including shows like Westworld. Disney reported it was exploring a similar expansion as its “content sales/licensing and other” business segment reported an 86% increase in operating loss in Q4.

Sony did well with content licensing. It was one of the only media companies to forgo the creation of its own premium streaming platform that allowed it to focus on the immediate returns of its content. The company earned nearly $4 billion in revenue in fiscal year 2022 from producing television content and licensing it to others.

Next story loading loading..