The bad news is long-time ad industry forecaster
Brian Wieser has issued a 2023 forecast for U.S. ad spending that comes in at nearly half the growth rate of the Big 4 holding company consensus. The good news is that he projects marginally higher
growth for 2024 (see chart above).
The new forecasts are part of an extensive update by Wieser, who previously ran the forecasting and market intelligence units of two of the Big 4 -- GroupM
and IPG Mediabrands' Magna -- before launching his own publishing and economic analytics business, Madison and Wall.
Wieser's revised outlook is based on a fair amount
of soul-searching, rethinking and reorganizing various segments that go into the U.S. advertising economy, and is derived from the public filings of 80 individual companies, as well as "a
significant volume of U.S. government data," and his net conclusion is that after a relatively hyper-accelerated period of growth in U.S. ad spending, the marketplace is returning to a "normalized"
rate of growth.
"The U.S. advertising industry experienced a period of massive expansion during the pandemic, following on a fairly good end to the 2010s, which also represented a period of
above-trend growth both in terms of its own history and the economy as well," Wieser writes in the latest edition of his
Madison and Wall newsletter, scheduled to be published later today.
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"If anything, it could be considered a positive that the industry didn’t fall faster, or even decline over the past year-and-a-half, especially as much of the industry seemed to
try to talk itself into a downturn last year by fearing for a recession that never came," he continues, citing "vast stores of savings for wealthier consumers and significant disruptions to labor
markets which empowered workers – including those with lower wages – to secure higher levels of compensation" as reasons mitigating a U.S. economic recession.
And while some
sources, including MediaPost's coverage of Guideline's U.S. Ad Market Tracker, suggest the U.S.
ad market did fall into a nearly year-long recession, Wieser says that when other data -- especially in-house spending by blue-chip advertisers as well as long-tail advertisers fueling much of the
growth of digital advertising platforms -- the U.S. ad market continued to grow and not recede even as it was reaching a new normalization.
Excluding the effects of political advertising,
Wieser's revised outlook shows relatively healthier gains for the U.S. ad economy in 2023 and forecasted for 2024 (see chart below).
That said, Wieser also concludes his updated forecast
noting that political ad spending continues to expand in its relative importance to the overall ad economy.
"During 2024, I expect that there will be approximately $17 billion in revenue
realized by media owners from political advertising. This is almost triple the $6 billion media owners generated in 2016, although only modestly more than 2020’s $14 billion.
"Political advertising has become an increasingly important component of almost all forms of media (see chart showing shares at bottom), not only local broadcasting, where it will likely retain an
outsized role given its effectiveness in driving election outcomes. However, internet-related advertising has become increasingly important, and as this category continues to grow, its
year-over-year skews to growth rates will become increasingly evident."
