WARC has released data from its ‘The Marketer's Toolkit 2023: Future of Media’ report, which forecasts a $90bn slowdown in digital ad spend.
The report is based on data from WARC Media; findings from a global survey of 1,700+ marketers, and interviews with experts from EY, FramePlay, GroupM, Publicis Media and others. It found that ad spend is growing but at a slower pace. WARC’s latest forecast is $880.9bn, removing $90bn of growth potential for 2022 and 2023, meaning that digital media owners are likely to have to fight harder for ad revenue growth, and, increasingly, will compete with one another for ad dollars.
Despite the efforts of the big social platforms to branch out, with Meta pushing the metaverse and Snap investing heavily in augmented reality, WARC forecasts pureplay internet ad growth this year at just 5.5 per cent, down from 42 per cent in 2021.
Defying the slowdown, retail media is increasingly favoured by advertisers, the report found. Now the fourth-largest medium by ad spend, with global investment totalling $110.7bn in 2022 and forecast to reach $121.9bn in 2023 according to GroupM, it is on course to become more valuable to advertisers than linear TV in 2025.
The report concludes that digital advertising investment has arrived at the threshold of a new era of slower growth. After years of rapidly increasing spend, marketers are planning with more caution. This reflects broader economic concerns, dynamic shifts in Big Tech, and changes in consumer behaviour.
Nearly a third of WARC’s Marketer’s Toolkit respondents expect 2023 marketing budgets to be lower than 2022, resulting in the downgrade of WARC’s global advertising investment forecast to $880.9bn.
Marketers are rebalancing their ad budgets, decreasing investment in offline channels and increasing spend in online video, social media and gaming. TikTok ranked top choice for increased investment in 2023 by 76 per cent of marketers according to WARC’s Toolkit survey.
The report also found that media effectiveness is becoming harder to achieve. Linear TV reach continues to decline, while digital consumption is fragmenting across platforms and technologies, from new social apps to proto-metaverse gaming environments. The need for adaptable, innovative media planning has never been greater.
More than a third (34 per cent) of survey respondents identified media and audience fragmentation as one of their biggest causes for concern when drawing up plans for 2023. WARC said the situation calls for advertisers to adopt a more fluid approach to media planning and branding, and one that emphasises the importance of communities over basic demographics in segmentation.
While over half (52 per cent) of Marketer’s Toolkit survey participants expect to increase investment with social media influencers and creators as a whole, two-thirds (65 per cent) are planning to work with content creators to connect with communities “aligned with specific interests authentically tied to the brand”.
Whether assessing the impact of advertising on climate change, the role of media investment in supporting diversity, equity and inclusion, or the need to address a growing talent crisis, the media industry finds itself under increasing pressure to reform.
More than half (54 per cent) of US respondents to the Marketer’s Toolkit survey said that media planning recommendations in 2023 will include more diverse publishers, reflecting the importance of minority audiences in that market.
However, with only a third (34 per cent) of advertisers planning to include more low carbon alternatives in their media plans in 2023, it is clear more work must be done to persuade marketers of their role in combating climate change.
The Future of Media is the third report of a series of four that make up The Marketer’s Toolkit 2023. A complimentary sample of this report is available here.