2021 was a great rebound year for advertising after the catastrophic one that preceded. Now that some of the dust has settled, we’ve been seeing inflation; interest rates increasing at sizable rates and stocks dropping significantly. A recession is now predicted and feared to be here sooner than later. But what does that mean for the advertising industry? Let’s look at some history for some insight. According to AdAage, U.S. advertising spending decreased for the previous four recessions back to 1991. However, the really rough recessions before that, the kind that were “marked by periods of double-digit inflation,” advertising spend actually increased. For example, ad spend during the recession of 2009 was down -10.2% and the following year it increased to 8.8%. So, how do we know which will happen this year and the one following? Well, we don’t but we can speculate. At Locomotive we are optimistic. We expect a slight decline but not a full halt. We also believe we will see another large increase in digital marketing, just as we did in the midst of the 2020 pandemic with sourced content. Why, do you ask? Well, for one, it’s more cost efficient. With the rising cost of goods and services, agencies can use their budgets more efficiently with advertisements that utilize user generated content. Publicis Group’s, Zenith, expects internet ad spending to increase to 71% by 2024. Zenith also predicts overall ad spend to decrease this year to 11.6% from 18.7% in 2021. With that being said, it’s expected it to continue to drop in 2023 then begin rising again in 2024 with smaller gaps between overall advertising spend and internet ad spends.
Sorry! We know we just threw a lot of stats at you. It’s important to look at the past trends in order to predict what may be ahead. In summary, we expect internet advertising budgets to increase greatly. We predict that will inherently increase the number of agencies that utilize UGC content in their campaigns. We expect this, in part, due to increased budgeting caused by inflation. The efficiency through using sourced content campaigns helps advertisers get better bang for their buck! It’s more cost effective. We do expect this year to slow down, and most likely the following, but we have high hopes that it will slowly begin to increase again and we will see the trends from the earlier major recessions before 1991.
