Digiday+ Research: Brands won’t cut ad spend until 2023, but they will shift from branding to direct response
This research is based on unique data collected from our proprietary audience of publisher, agency, brand and tech insiders. It’s available to Digiday+ members. More from the series →
Consumers aren’t the only ones paying close attention to their spending and budgets during the holiday season — the brands they’re buying from are too, especially when it comes to their advertising spend.
For now, brands don’t have significant plans to cut ad spending in the fourth quarter despite the current economic climate, according to a Digiday+ Research survey of 62 brand professionals, but there is a definite shift moving into 2023. Meanwhile, brands definitively said they are shifting their focus from branding to direct response because of the economy. In other words, they’ll be spending on ads meant to drive consumers to make purchases during the holidays, rather than driving long-term brand awareness.
Digiday’s survey found that many brands will keep their ad spend steady through the holidays, rather than spend less in an unsteady economy. Thirty-seven percent of brand pros said they agree they plan to spend less than usual on advertising in Q4 because of the economy, while 34% said they disagree and 29% said neither — making for a fairly even split that doesn’t indicate a strong trend one way or another.
The fact that many brands don’t plan to cut ad spend during the holiday quarter makes sense considering the record-breaking sales that took place over Thanksgiving weekend. Consumers are clearly still participating in holiday shopping, despite the down economy. And 60% of brands and retailers actually expect their holiday revenue to increase over last year. So there doesn’t seem to be an urgent need to spend less on advertising — yet.
Moving into next year is a bit of a different story.
Looking forward into 2023, more brands told Digiday that they have plans to cut their ad spend. In fact, the percentage of brand pros who said they agree they’ll spend less than usual on advertising rose from around a third in Q4 to nearly half in 2023. Meanwhile, about a third of respondents said they disagree that they will cut ad spending in Q4, and slightly more than a quarter said the same of 2023.
The significant shift that will happen among brands during the holiday season will be what they focus on in their advertising, Digiday’s survey found. Nearly half of brand pros (47%) said they agree that they plan to shift their budget from branding to direct response because of the economy, compared with only 18% who disagreed.
With consumer spending proving to be strong during the holiday season this year, it is not surprising that brands are planning on focusing on advertising that drives sales, rather than ads that build brand awareness. The move is somewhat of a short-term one, as opposed to long-term branding efforts. But it is understandable, as brands work to shore up their bottom lines heading into an uncertain 2023, and after 83% told Digiday they believe we’re entering into a recession.
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