Dive Brief:

• National ad spending dropped 6% year-over-year in January, extending a monthslong decline, according to a report that Standard Media Index (SMI) shared with Marketing Dive. 
• Among product categories, consumer packaged goods (CPGs), pharma and travel each saw increases in spending YoY. Tech, entertainment and media, and wellness all faced sharp drops. 
• Traditional ad spending also decreased during the month, while investments in digital channels were relatively flat. A sluggish start to 2023 could reflect ongoing macroeconomic challenges that have led some marketers to be more conservative with their budgets. 

Dive Insight:

SMI’s latest findings suggest advertising is off to a bumpy start this year, a potential reflection that economic issues like inflation are keeping brands in belt-tightening mode. Still, not everything was doom and gloom for January. The month’s total take was the second-best on record tracking back to 2017, according to SMI. 

Though January saw a drop in traditional ad spending and flattish digital growth, progress was made on certain fronts. A November SMI report saw digital spend actually decline for the first time since July 2020. SMI captures actual agency invoicing data that represents about 95% of the overall national brand ad spending, the company claims.

Within product categories, the travel sector saw the largest YoY increase in spending of 19%, a continued bounce back from pandemic lows. Behind travel, CPG had the second-highest YoY growth of 16%, followed by pharma (15%), auto (9%) and restaurants (2%). The remaining categories all faced declines, including apparel and accessories, general business, retail and financial services. Among the steepest declines, entertainment marketing and technology both fell by 23% YoY and wellness fell by 37%. 

As many of the difficulties from 2022 persist, including a war, inflation and fears of a recession, many are short on optimism for the year ahead. According to a survey from the National Association for Business Economics, 58% of economists believe the likelihood of a recession within the next year is more likely than it is not. Such an anxious atmosphere could see advertisers continue to clench their wallets.

Conversely, the situation could brighten up down the line if market tensions ease. Ad spend is expected to grow 6% to $509 billion in 2023, according to an earlier report from the Winterberry Group.