Difficulties confronting the advertising and media sector in 2023

DNHN - The Kantar website has just published a report titled Media Trends and Predictions 2024 (Global Media Trends and Forecasts in 2024) that provides an extensive analysis of the state of media in 2023 and includes a wealth of data.

Kantar offers readers a comprehensive overview of the significant developments that have transpired in the Communications and Advertising sector from the start of the year to the present through this report.

International economic conditions and advertising sector earnings

According to projections by the International Monetary Fund (IMF), worldwide economic expansion will decline from an approximate 3.5% level in 2022 to 3.0% in both 2023 and 2024. The April 2023 Outlook Report for the World Economy (WEO) indicates that while this figure exceeds the initial projection, it remains modest in comparison to past trends.

Advertising industry revenue: Despite the deceleration in economic expansion, it is anticipated that advertising revenue will maintain a consistent level through the conclusion of the current year. For 2023, GroupM anticipates a growth rate of 5.9%. Despite being initially characterized as positive, this increase becomes negative once inflation is accounted for. Nevertheless, this phenomenon does not have an equivalent impact on every market.

Secondly, the progression of machine learning and artificial intelligence

The technological breakthrough in artificial intelligence: 2023 will be a year of extraordinary advancement in the field of AI technology. Diverse applications have been developed using this technology, including product images and advertising content.

The implementation of machine learning presents prospects for the automation and enhancement of advertising processes, as well as the prediction of customer behavior and advertising efficacy. Deep learning technology has made notable advancements, specifically in the domains of personalization, predictive analysis, and content generation.

3. Constraints of inflation

Prolonged economic difficulties will coexist with inflationary pressure in 2023. Nevertheless, the ramifications of inflation exhibit variability and manifest in diverse ways:

Decreased satisfaction with living standards: According to the most recent TGI data, the proportion of adults in the United Kingdom who are satisfied with their standard of living has decreased significantly (by 9% over the past year). Inflation has significantly influenced both personal and familial spheres.

Income disparity: A majority of high-income earners (62%), expressed contentment with their present standard of living. Only 35% of those with the lowest income, in contrast, experience satisfaction. This discrepancy serves as evidence of the inequitable consequences of inflation on various social classes.

4. Difficulties faced by SVOD services

A subscription video-on-demand (SVOD) service, which is also known as an online video subscription, involves the transmission of video content through the Internet in exchange for a recurring fee from users to access the content.

Rate of SVOD cancellations in the United Kingdom: The rate of SVOD cancellations increased from 9.9% in the second quarter of 2022 to 14.2% in the third quarter of 2023 on the UK market. This finding suggests a substantial surge in the rate at which consumers discontinue related services.

As reported by Kantar Entertainment on Demand, quarterly fluctuations have been observed in the number of subscriptions to SVOD platforms. Over time, total monthly expenditures on SVOD have increased. Expenditures increased from £17.18 in the first quarter of 2020 to £24.37 in the second quarter of 2023 in the United Kingdom. During the same period, this amount rose from 33.88 USD to 52.12 USD in the United States.

The primary obstacle that the advertising industry will face in 2023 is the need to adjust to new circumstances. Due to the ongoing period of constant change throughout the remainder of 2023, the advertising industry will continue to face a variety of obstacles.

Brands must consistently convert and update information. The industry must consistently innovate and adapt to an ever more robust economic and technological environment to sustain growth and efficiency.

Tuan Golf