GroupM, the world's leading media investment company consisting of some of the largest media and marketing agencies such as Mindshare and Wavemaker, revisited its global ad spending growth estimate and decided, for the second time this year, to cut the expected growth rate.
Despite the global economy hurdling towards a recession, GroupM retains its belief that the worldwide economy will be able to overcome the temporary challenges ahead and come out stronger than ever.
The media company is not only confident that the underlying strength of the global market will prevail, but that the US economy will manage as well, citing its healthy fundamentals, constant business creation and new venues for ad spending such as retail marketing.
At the end of 2021, GroupM forecasted that the global ad market will expand by 11%. Of course, now that 2022 is nearing its end, it has become obvious that a more realistic growth rate estimate is closer to 6.5%.
For its mid-year update in June, GroupM showed that the US experienced a faster growth rate than the global average, despite slashing previous predictions just like it’s done in the case of the global expansion rate. For the US, GroupM cut the expected growth rate to 7.1% down from 12.8%.
GroupM is confident that 2023 will bring a positive economic outlook despite it being an off-cycle year, i.e., having no incremental ad spending events such as the Olympics or elections in the US. For now, the media company is predicting a 5.9% growth in global ad spending for the following year. Only this time, it’s the US that’s lagging. GroupM is expecting 5.5% ad economy expansion in the US in 2023, just a bit under the global level.
Global Director of Business Intelligence at GroupM Kate Scott-Dawkin described lowering ad spend growth expectations as a “deceleration” of unrealistic growth rate forecasts in 2021. Unrealistic, because they relied on the growth rate boom following the pandemic of 2020 and the ad recession.
In that sense, Scott-Dawkins doesn’t see the cuts GroupM has made to ad spending as a downward trend. Rather, she sees them as a “normalization” of oversized and overblown expectations from 2021 year-end estimates.
It is possible to make unrealistic forecasts based on the skewed growth rates following the lockdowns of 2020. Now that GroupM has taken the pandemic out of the equation, their next forecast will hopefully come true, as that would signal a slight improvement in the global ad spend market following a very difficult year.