Time sure flies when you’re having fun, right? With well over half of 2022 in the rearview mirror, now would be a good time to check-in and see how the advertising industry has been holding up.
The Run-Down
In new analysis, ad spend categories for travel and entertainment soared to record levels in the first half of 2022, whereas ad investments in real estate, home goods and pet supplies seemed to decline in comparison to last year’s rates. Consumer shopping trends within the two latter markets have begun to decrease as these markets shift. This is due to rising interest rates, fuel expenses and high inflation – all signs of a recession looming.
Overall, industries that thrived during the peak of the pandemic now find themselves reducing their advertising spends as inflation soars, and consumers are growing fearful. Seven-in-ten Americans view inflation as being a great issue for the United States, underlining consumer concerns. However, this shift presents an interesting dichotomy, as it reflects issues for the finance and real estate industries and simultaneous benefits for pastime-related industries (like movies) within the same period.
The Intersection of Consumer Habits and Ad Spend
Let’s put some numbers to it.
Media and entertainment ad investments showed the most drastic increases, growing from $5.8 billion in the first half of 2021 to $10.9 billion in the first half of 2022. This has mostly been driven by streaming companies – go figure. Movie promotions also grew within this category, with $1.2 billion being invested so far this year. This spend highlights how companies are aiming to get people back into movie theaters, as they were mainly off limits during the pandemic.
Within the same period, consumer electronics ad spend increased by 274% due to the nearing end of the semiconductor chip shortage. Additionally, Alphabet, Apple and Samsung all released new phones within the first half of 2022, spending a total of $597 million on advertising. Business softwares also witnessed an increase within the first half.
Despite fluctuating gas prices, travel ad spend increased 83% YoY to $2.1 billion, indicating the increasing popularity of “revenge travel,” or the desire many Americans have to travel to compensate for the adventures that were lost during the pandemic. The cruise ship industry, which faced a series of pandemic-related public relations and health crises, increased advertising by 250%. Similarly, airline spending has increased by 140%.
Education, too, has invested heavily in advertising, for students are now returning to campus. In-person university ad spend increased 79% YoY between January and June; online education was up 264% during the same period, highlighting its intention to stay for the long haul. Education and training institutions are also taking advantage of the “Great Resignation,” for many professionals are currently quitting their jobs or pursuing new career paths.
Restaurant and bar advertising has seen a 25% decrease so far in 2022, possibly being attributed to both the pandemic and the current economic turmoil that has prompted U.S. households to spend less on dining-out.
The financial and real estate investments sector witnessed a dip, dropping from $902 million in June 2021 to $769 million in June 2022. Many individuals purchased homes outside of cities and ordered furnishings that are good for working remotely; however, things are now, as expected, slowing down in these areas.
Quick Look at Digital
Let’s take a look at things through a digital lens.
With more people using the internet with every coming year, it comes as no surprise that the digital ad market has also been on the rise. Spending in digital advertising will continue to increase. In fact, according to recent data, US digital ad spending is projected to hit $239.89 billion in 2022, which will be a 13.6% increase from 2021.
The biggest growth is anticipated to stem from the retail industry; according to market analysts, this sector is expected to spend 20.2% more on digital ads in 2022. In comparison, the average throughout all industries is 15.6%. This amount is followed by the consumer packaged goods industry, which is expected to ultimately spend 17.9% more than 2021.
We’re Here to Help
Although economic uncertainty and fluctuations in consumer behavior must be considered, people are still purchasing, and brands still need to reach their audiences. The Ward Group is always here to help. Our skilled team of experts will be able to manage your budget with caution and mastery, enabling you to achieve your advertising objectives and goals. Contact us today to get started!