Global ad market faces ‘car crash’ next year amid cost of living crisis

theguardian.com:

The $850bn (£720m) global advertising market is facing the prospect of a “car crash” next year as the cost of living crisis forcing households to drastically cut back on spending triggers companies to consider slashing marketing budgets.

The advertising industry remains bullish about its prospects – the football World Cup is forecast to keep growth at a gloom-defying 8.4% this year, while 6.4% remains pencilled in for 2023 – despite mounting concerns that the economy it feeds off is heading for recession.

“Conventional wisdom would suggest that next year will be a car crash,” said one senior media industry executive. “Consumers are being squeezed harder than at any time since the 1970s. Many things will become secondary to essential spending, all of which creates a nasty cocktail for the ad industry.”

During the last advertising recession in 2009 the industry doyen Sir Martin Sorrell encouraged brands to maintain marketing spend, citing evidence that those that did would come out the other side trumping rivals for market share.

In practice, advertising budgets make for a quick cost-cutting strategy to boost, or at least salvage, a company’s balance sheet as demand dries up.

“With recession looming the ‘R-word’ makes marketers look at whether they should be cutting spend,” says Richard Broughton, director at Ampere Analysis. “Marketing is an easy cost to cut and it tends to have an instant and immediate impact.”

Earlier this month, WPP, the company Sorrell built into the world’s largest marketing service empire before an acrimonious departure four years ago, saw £700m wiped off its market value as investors reacted to concerns over client ad spending next year as the global economy weakens.

“We are, like everyone else, aware of