Will the Ad Slowdown Impact Agencies This Year?

Despite the unstable economic and political marketplaces, with inflation, the ongoing Russian invasion of Ukraine, and a bear market all providing pressure, global ad agencies remain fairly buoyant about the potential for continued growth in ad spending post-pandemic. Entertainment attorney Brandon Blake, of Blake & Wang P.A, digs into whether this is simple optimism, or a given. 

Cyclical Event Growth

Much of this continued optimism despite worries around supply chain issues and a possible economic recession is based on the assumption that it will be offset by key cyclical events scheduled for the remainder of 2022. One of the most important of these, of course, is the upcoming US midterm elections. These are expected to generate in the $9M area in political advertising spend. There’s also the rescheduled fourth-quarter FIFA World Cup, again expected to bring in event-related advertising income. 

Sluggish, but Relevant

However, it’s common sense that relying on cyclical events is not a real indicator of genuine growth. And with increasing pressure from inflation and other market woes, can we truly say that the advertising market is immune to knock-on effects?

Not really, which is likely why we’ve seen several key economists predict that the knock-on effects will dampen the advertising market, and the bottom lines of advertising agencies globally, more than the buoyant predictions suggest. 

However, it is important to keep focus on the fact that not all advertising efforts are being hit by current market indicators. While some key demographics, including tech and car advertising, are likely to take a hit, digital sectors are expected to rise to 57% of overall ad dollars through 2022. Online video remains a compelling corner of the market, and entertainment has historically weathered economic downturns with decent success.

In short, it’s likely too early to tell, but with some grumbling from the market inevitably filtering through, optimistic advertising spend predictions are likely to see some readjustment through the year.