Dentsu’s forecast for 2023 shows a year of slowing growth reaching $740B, led by digital

The industry advertising investment will total $713.6 billion by the end of this year, down by .7% from the previous July 2022 forecast of 8.7% growth. Some of the challenges impacting 2022 include rising inflation, higher interest rates, market recessions and political uncertainty that impacts business and consumer spending, according to the report.

“2022 has proven to be another strong year of growth for the ad industry, despite the political and economic uncertainty that surfaced,” Peter Huijboom, global CEO of media and global clients at Dentsu International, said in a statement. “It is clear from our report and forecast the effect of this is being felt into 2023 too, and we need to be realistic on how this will impact the industry, the inventory, and the returns we should expect from available budgets.”

But Dentsu expects the numbers to look stronger going into 2024 and 2025, with ad spending expected to increase 4.8% to reach $776.9 billion in 2024 and then increase 4.5% to reach $811.6 billion in 2025.

Additionally, digital spending continues to lead the way, accounting for a share of 55.3% of ad spending in 2022 and 58.2% in 2024. Newer categories within digital, such as retail media and CTV, are also showing the biggest increases in investment.

The Dentsu outlook seems to track with the other holding company analysts GroupM and Magna from earlier this month. Both firms adjusted their forecasts and said 2023 will deliver some strong results but clarifying that the rate of growth will slow. They also pointed to CTV and retail media as drivers, with an optimistic view on OOH in particular.

“Key sectors are increasingly investing more dollars — in particular, political spending in out-of-home hit record highs,” Anna Bager, Out-of-Home Advertising Association of America president/CEO, previously told Digiday.

More from the report:

• Across the regions in 2023, there will be modest growth in 51 out of 58 markets analyzed – with APAC in the lead at 4% growth expected and EMEA following with 3.8% growth.
• Growth is expected in almost all other channels, including television ad spending increasing by .2% to hit $182.7 million, with Out-of-Home increasing 2% and cinema increasing 6.1%. Audio is also expected to grow by 2%.
• Digital spending is still growing on pace, particularly with CTV growing faster than traditional TV spending that was flat in 2022. CTV is expected to increase by double digits, up 23.7% in 2022 and 20.2% in 2023. New Netflix and Disney+ ad-supported models may draw more subscribers and will play a larger role in the market, per Dentsu.
• More than 70% of digital spending will be transacted programmatically across various platforms, including online, CTV, digital audio and digital OOH. This is leading to more options and flexible choices for campaigns, making it easier to plan and automate.
• We will keep talking about attention metrics. The added pressure on budgets could lead to more focus on these measurements to “ensure [they] work as hard as possible,” the report noted. Dentsu’s attention economy research program has been observing 10,000 participants across more than 300,000 ads since 2017.