“Staying safe isn’t going to cut the recessionary mustard”: 15 marketers on the latest AA/WARC 2023 adspend projections

The experts’ take on real-term decline for adspend this year amid some optimism, the pursuit of digital channels to optimise budgets and why privacy needs to be front and centre of 2023 plans.

‘Cautious optimism’ is the theme once again for marketers eyeing the state of the market for advertising investment.

The latest AA/WARC analysis revealed the milestone of a ninth consecutive quarter of growth in adspend in Q3 2022 – with forecasts of a 3.8% growth across this year. This however comes with a warning that inflation will in fact mean that the market is likely to decline in “real-terms”, after staying flat by the same measure this year.

But with a much less bleak outlook proposed for 2024, PMW asked our experts to comment on the opportunities ahead for marketers, and what they need to hunker down on to get the best out of 2023 and beyond, including “proper” measurement, closer than ever scrutiny on privacy measures and best channels for investment.

“Being able to properly measure effectiveness couldn’t be more important”

Ben Alwin, Head of Paid Media, SINE Digital: "It's great to see adspend has continued to rise, but, as brands navigate a turbulent landscape, it's not surprising that budgets are moving further away from traditional advertising and being funnelled into digital channels. We strongly believe this is the right decision because being able to properly measure effectiveness of campaigns couldn't be more important, especially as marketers tighten budgets and strive to make stronger connections with both existing and new audiences.

“The onus is now on marketers to truly understand how important it is to use data-driven, digital-first campaigns so that they truly make it count during the toughest of economic times."

Stefanie Briec, Director, Head of Demand Sales UK & International, AudienceXpress: “As broadcasters broaden their remit and more ad-supported services emerge in the video landscape, marketers will direct their budgets towards these quality ad environments to boost incremental reach, connect with target audiences, and hit their campaign goals.

“BVOD clearly continues to be an important element of the media mix, and while spend may be more subdued across 2023 due to rocky economic prospects and the pressures of inflation, it is reassuring that marketers are confident in a relatively swift recovery.”

Carina Moran, Head of Agency Strategy Development, Yahoo UK: "In times of financial scrutiny, it is more important than ever that adspend is delivering results and that corners are not being cut in an effort to deliver fast returns. Flexibility is pivotal as brands rethink their approach to efficiently engaging an ever-changing consumer. Overall, it's important for brands to be adaptable and creative in their approach to online advertising, both channel and format, in order to maintain growth in this challenging economic climate.”

“A clever multi-channel approach tends to be notably more cost-efficient”

Maren Seitz, Senior Director, Analytic Partners: “The reshuffling of budgets across the likes of cinema, OOH, and online media is not unexpected – after long periods of restricted movement, consumers are out and about again, but they have also evolved in terms of their online behaviours. Hence brands are reevaluating what works and adjusting accordingly.

“To counteract a looming economic downturn, there is a strong need to invest smarter and make the most of budgets. This involves experimenting with more cost efficient channels, as well as a stronger focus on ensuring channels form synergies and complement each other in terms of reach and messaging. A clever multi-channel approach tends to be notably more cost-efficient – we know that just starting with two channels can deliver on average a 35% higher ROI than just one channel.”

David McConachie, Director of Publisher Partnerships, Seedtag: “The latest AA/WARC Expenditure report revealed a disheartening decrease in online national newsbrand spend, despite an overall rise in online display advertising. This will cause concern among news publishers, as most are producing quality, trustworthy content delivered in premium, user-friendly environments for brands to advertise in.

“For many marketers however, this should serve as a wake-up call to update their buying approaches. One solution could be to avoid using out-of-date and restrictive site and keyword allow lists, which can limit the reach of their advertising campaigns. Instead, marketers should explore fresh methods of unlocking new audiences, which can drive higher levels of engagement for their campaigns. By embracing a more dynamic and forward-thinking approach, marketers can capitalise on the opportunities presented by the digital news landscape and drive better results for their brands.”

“B2B marketers: now is the time to be bold”

Michael Richards, Managing Director, alan. Agency: “The ad market has shown great resilience, but with a real term decline and a seemingly inevitable downturn in 2023, it has never been truer to say that every penny counts. This is as true for B2B as it is for our B2C colleagues. Our own research shows that 82% of business leaders find B2B marketing boring and repetitive – so now is the time to be bold.

“Staying safe and doing what you’ve always done just isn’t going to cut the recessionary mustard. Today’s figures galvanise our argument that marketers need to invest in work that is electrifying and deeply moving. Injecting emotion and humanity into their clients’ work will sort the wheat from the chaff of 2023.”

David Kells, Director of Partnerships, Raconteur: “In the past year, many incredible moments have dominated our screens (and our lives), and resulted in a positive surprise for ad spend. Rising 4.3% in Q3 is exceptional, and it’s fair to say that opportunities for ad spend in 2022 have been rife for B2C brands.

“And with the FIFA Women’s World Cup, Rugby World Cup and King Charles’ Coronation all on the agenda, B2C marketers must be licking their lips thinking about the year ahead. While there are not as many big occasions, the impact will remain strong.

“However in the world of B2B, the market feels resilient rather than domineering. The energy is high and industry conversations mirror the pragmatic yet confident approach the report figures displayed. In the coming quarters, while smaller celebrations, it will be interesting to see just how creative B2B marketers will be with their own pots of gold.“

“Never-ending growth is not to be taken for granted”

Raphaelle Tripet, Managing Director EMEA, TripleLift: “While growth projections have been revised, there are certainly positives to be taken from the industry’s resilience. If marketers are to take full advantage of this cautious positivity, there must be a focus on spending more wisely and responsibly – as last year’s earnings announcements from big tech companies have shown, never-ending growth is not to be taken for granted.

“Consolidating the supply chain, increasing ad spend accountability, and flexibility in media buying are all ways for marketers to optimise performance and return. But ultimately, the shift away from unfocussed ad buying will have a positive ripple effect on the entire ecosystem: more quality inventory will be available and more ad spend will go to supporting quality journalism.”

“OOH bucks the trend as it digitises”

Elliott Millard, Head of Planning, Wavemaker UK: “Three distinctive themes have emerged from the latest AA/WARC expenditure report. First, for channels like out-of-home (OOH) and cinema, the new normal is kind of like the old normal. Audiences are pretty much back to pre-pandemc levels so adspend across these channels are back to normal as advertisers are weighing in behind them.

“Secondly, it’s clear that for advertisers that if an ad can be video, then it will be. It would be fair to say that this is a direct response to the fact that video formats are up (bar TV) and more traditional ‘static’ formats are down. OOH bucks this trend - as it digitises - and reaps the benefits from the return of audiences.

“And finally, growth seemingly isn’t enough. It’s fascinating to see the tension in advertiser behaviour and shareholder belief. We are seeing clients upping their spend when it comes to trackable, bottom funnel formats – social, display and search are all up dramatically. Yet, the businesses providing these channels are where the axe is falling. It seems even 50% growth in the category isn’t enough to satiate the city’s demand for shareholder return, and keep the wolves from the door.”

Patrick Reynolds, CMO, BlueConic: “While the pandemic may largely be behind us, marketers and advertisers are seeing storm clouds gathering, resulting from supply chain challenges, rising inflation, and other macroeconomic factors. The growing ad market indicates that smart marketers aren’t retreating from the approaching storm. They are spying the opportunity before them by investing in systems of agility and optimising their spend to focus on customers, user experience, and contextual utility.”

Rik Moore, Managing Partner of Strategy, The Kite Factory: “The 2023 projection of a 3% real terms decline yet again reinforces the need for advertisers to be smart about how they navigate the difficulties in the next 12 months. What new opportunities, occasions and moments will be created by changing consumer behaviours brought about by the economic challenges – and how can a given brand use that insight to protect income and help their audiences?” 

“Brands must focus on privacy-centric solutions that protect both budgets and customers”

Charlie Johnson, VP International, Digital Element: “Real-term growth in the year ahead will be a challenge, but there is a reassuring air of resilience in the advertising industry – even with cost of living pressures hanging over us. An effective communication strategy will be essential to survive these testing times, and finding the right approach to privacy-compliant targeting will be key for a successful 2023.

“The cost of GDPR violations in 2022 amounted to €2.9bn – almost three times the €1bn of 2021. It’s clear the implications of breaching data protection laws have been steadily increasing in size. Brands who want to connect to the right audiences, maintain consumer trust, and grow their business opportunities, have to focus on privacy-centric solutions that protect both their budgets and their customers.”

James Coulson, Managing Partner, Consultancy, Kepler EMEA: “The positive part of the story is that the recessionary thump is looking to be mercifully short. This means now is the time for advertisers to invest in their brand, speculating now to accumulate later, and to prepare so that they emerge from this downturn faster, stronger and more profitable than before.

“The winners over the next few years will be the brands who have adopted an agile mindset, able to react quickly and move their program to coincide with external pressures. With measurement and first-party data technology likely to be the current priority areas of focus, it’s likely that we will see continued investment in the talent, technology and vendors that can facilitate this.”

Lucia Mastromauro, Managing Director, Acceleration UK: “There is a risk of tighter budgets deterring brands from investing in alternatives to third-party cookies, but it’s important to maintain focus on their privacy and data strategy so they have viable means of measurement and targeting when we reach Chrome’s deadline. Brands are facing the challenge of how to break down silos and bring together data in a privacy-safe way, engaging with the multiple solutions and methodologies to wean off their dependency on third-party cookies. The journey involves building a robust strategy and roadmap as soon as possible to ensure a seamless transition.”

“Brands need to retain their commitment to sustainability and inclusion”

Richard Kelly, Chief Revenue Officer, Mindshare UK: “While 2023 may not be as turbulent as the recent past, the emphasis will be on working in partnership with clients to navigate sluggish economic recovery and low consumer confidence.

“With the cost of living crisis naturally front-of-mind for advertisers and the public, we can’t ignore wider challenges such as the rapid evolution of technology, the impact of regulation, and changing consumer behaviour. At the same time, even as belts continue to be tightened, brands need to retain their commitment to issues such as sustainability and inclusion.”

“Away from those ‘made for advertising’ sites created purely to extract spend from the market”

Jacque Chadwick, Commercial Trading Director, Ozone: “Nine consecutive quarters of advertising growth represents incredibly positive news for our sector, especially considering the backdrop of the past few years. While inflation, recession, the cost of living and the conflict in Ukraine have never been far from the headlines, there is a definite sense of brands being focused on not losing ground to competitors, rather than cutting back on advertising spend. The ongoing growth expected for the ‘golden quarter’ is reflective of our experience – a period that saw huge demand for premium online display and video solutions.

“Looking at the year ahead, we are excited to see the Advertising Association put trusted, inclusive and sustainable advertising at the heart of their mission – a move that should really benefit trusted, inclusive and sustainable media channels. We’re hopeful that this advertiser desire will drive a broader shift in online budgets to the highly attentive media channels built with the reader or viewer in mind, and away from those ‘made for advertising’ sites created purely to extract spend from the market.”

David Balko, Chief Client Officer, Tribal Worldwide London: “The pain consumers are feeling may be changing their buying habits, but they are still spending, and this creates a fertile battleground for brands to attract and retain consumers. We know that brand communications done well during difficult times pay off in the long term and this data is encouraging. Brands must ensure they are creating powerful, joined-up brand experiences that extend beyond the communications and into sticky and long-term engagements.

“There are important challenges emerging as marginalised consumers are growing as a consequence of the cost of living crisis and we as an industry representing brands have a duty to ensure that the gaps between rich and poor aren’t growing as a result of our work. There is still much to do here.”

Gustav Westman, CEO and Founder, BrightBid: “With increased competition and rising CPC inflation in the second-largest market for Google search, brands need to use solutions that offer accurate data analysis, audience targeting, and keyword optimisation to help combat inflation. “Competition in search is heating up, Google is having to contend with Microsoft’s investment in Open AI and ChatGPT’s predicted use for Bing.

"The complexity of the search environment now demands AI technologies designed to optimise marketing campaigns that cater to the customers' goals and not just the platform. The most effective solution for brands is to integrate AI processes that boost their marketing campaigns and deliver desired results through effective collaboration with marketing teams and repurposing human talent on creative and insightful tasks”