How soft is the ad market, really?

It’s the question everybody has—are advertisers spending or not? After a timid start to the year, it seems we’re finally getting an answer.

If you ask the investment bank William Blair, the digital ad market is “still soft,” but a slow rebound is coming, per a survey from the firm based on responses from buyers and participants in the digital ad industry, published in early July. It concluded that “brand spend is being heavily scrutinized for the second half of 2023,” but many budgets haven’t really been cut. Most respondents said they saw budgets rise during the first half of the year.

An analyst’s note from the financial firm Macquarie found that the ad market’s “underlying tone is positive,” and that agency media buying is strong.

How about the holding companies? In the second quarter, Publicis saw organic revenue jump 7.1%, while IPG’s sank almost 2%. Omnicom played the role of Goldilocks, reporting organic revenue growth of 3.4% and touting its investments in artificial intelligence.

Hmm. Well, what about Big Tech? Google and Meta, which represent more than a healthy chunk of the digital ad ecosystem, both reported better-than-expected second-quarter earnings. YouTube’s ad revenue popped for the first time in three quarters, growing 4% and reflecting “further stabilization in advertiser spend,” Philipp Schindler, Google’s SVP and chief business officer, said on the company’s earnings call. Meta saw ad revenue in North America jump 11% and the number of ad impressions served jump 34%.

Meanwhile, some major companies are also upping ad spend: Kraft Heinz said it increased marketing spend by 23% year over year in Q2, while Nestlé said it plans to continue ramping up marketing investments in the second half of 2023.

When stitched together, everything seems pretty…normal? “The advertising market is fine. I would not use the word soft to describe it. It’s normal,” Brian Wieser, a marketing consultant and principal at consultancy Madison and Wall, told Marketing Brew. At the end of July, Wieser wrote that he expects ad spend to remain in line with industry forecasts of about 8% growth for digital advertising.

Still, Wieser told us that the market, though still buoyed by inflation, was hurt early in the year as  “unsustainable” advertisers like crypto companies and instant-delivery startups pulled back ad spend. “You had double digit growth in advertising last year,” he said, “and some of that money just had to go away.”

Beyond digital, industry forecasts expect the broader market to grow this year, albeit slower than initially predicted; Dentsu, for instance, recently said global advertising investment will rise 3.3% this year.

“I think we’ll get there,” Cara Lewis, chief investment officer at Dentsu, told Marketing Brew. However, she said budget cuts that were implemented toward the end of last year have tended to stick.