Rising interest rates and elevated inflation are signals that typically lead to an economic slowdown, and sometimes a recession. Based on numerous client conversations, the concern is certainly on everyone’s mind. 

However, despite these concerns, at MediaRadar, we observe a more textured landscape. Much like the early days of the pandemic in 2020, we don’t see the market moving in unison at all. There are distinct categories of advertising that are sharply up. The key to navigating these times will be remaining agile, tracking and pursuing the healthiest categories of advertising.

We’ve shared some advice and insight on what ad segments are healthiest.

A rising tide in advertising

One conclusion: Advertising is healthiest where there is very high demand. This sounds obvious, but it’s quite profound to see the results. 

• Higher education. The business of for-pay private colleges and universities is highly competitive. Schools are trying in earnest to lure students back in-person. University ad spend was up 79% YoY during the first half of 2022. Online education was up 264% YoY with a first half 2022 investment of $199mm. 

• Career training. Advertising for construction and trucking training is up 13X and 11X, respectively YTD 2022. There is massive demand for anyone in both logistics (The Truck Driver Shortage) and construction too (Response Needed to Housing Supply Crisis). For example, there is demand for more than 5.5 million homes to be built and demand for 60,000 truckers immediately.

• Skill tune-ups. The Great Resignation meant droves left the workforce. Many are tuning their skills for the future. Some examples of where advertising is up dramatically: Executive education ($37mm, +651% YoY), business schools ($52mm, +33% YoY), and culinary schools ($17mm, +1545% YoY).

• Streaming channels. This is a hyper-competitive segment in-part because so much new programming is being released. Netflix isn’t just marketing for big tent pole names like The Gray Man, but for hundreds of shows each year. Each show typically has marketing to a specific audience profile. Q2 2022 total ad spend for subscription streaming services was $414mm. 

• New movie promotion. Ad placement to support in-theater releases is growing. Dramatically (Massive Film Marketing Spends Are Back). In MediaRadar we found over $1.2B was invested to promote new releases through June 30, 2022. This is up over 325% YoY from 2021. Spend in 2022 is on pace to rival or exceed 2019. Conclusion: With audiences returning to theaters, studios are investing much to support releases.

• Travel. Surging fuel prices and angry crowds stuck at airports haven’t slowed airlines and others in the travel market from aggressively marketing. We’re surprised how broad-based the rise is in travel; airlines are just a part of the total travel pie. Ad placement in the first half of 2022 is up 83% YoY to nearly $2.1B. 
  • Cruise lines invested over $363mm in advertising through June of 2022 (up 250% YoY). 
  • Local tourism bureaus are busier than ever. Florida, California, South Carolina, Virginia and Michigan have a combined spend of over $140mm during the first half of 2022. In total 149 destinations ranging from Arguilla to Wyoming around the world are marketing in the U.S. International tourism groups – Brazil Tourism has invested over $1.3mm so far this year encouraging people to visit; last year there was no investment.
  • Airline ad investment is up nearly 140% YoY to $190m in the first half of 2022. While more than 120 airlines market in the US, there’s significant concentration of spend from Delta, Southwest and United. 

• Tech advertising is on the rise. From Jan to Jun 2022, we see ad spend in this category up 34% YoY to over $6.7B. Some of the increase is due to chip shortages gradually improving. While not out-of-the-woods, many tech companies will be able to see more inventory in the second half of 2022. Some of the surge however is coming from a dramatic rise in marketing for B2B software.
  • Financial software ($196mm, +128% YoY), 
  • Advertising/marketing software ($127mm, +274% YoY), 
  • HR software ($95mm, 417% YoY) 

Rollercoaster categories

With the pandemic abating some and consumers shifting their spending trends, it would be easy to write-off home furnishings and real estate. But the two categories have different kinds of headwinds, which means they may need the support of advertising. 

• Home furnishings. Ad investment supporting home furnishings was $3.2B in the first half, up 17%. June ad spend however was down 1% YoY. While demand ebbs, furniture inventories are building-up. Firms ranging from Target to Williams Sonoma will need to market in order to off-load product. This may yet drive advertising. 

• Finance & real estate. Ad spend was up 15% YoY in the first half of 2022. With mortgage interest rates rising and falling prices, ad spend however was down 15% YoY in June. We’ve heard from several sources that local real estate agents will need to work harder to market themselves and their properties, to get them sold. The days of homes “selling by themselves” is coming to an end. 

Post-pandemic headwinds

The fear of recession is not always the reason for declines in ad spend. Instead, society is evolving post-pandemic and this is shifting marketing investment. Here are some specific conclusions: 

• Alcohol sales. Alcohol (beer, wine & spirits) are down 21% YoY in the first half of 2022. Subscription alcohol services have collapsed their ad spend by more than 90% YoY. Large firms like AB InBev too are spending less on marketing. Big picture: There are numerous studies documenting (ie. Pandemic Drinking) the rise of drinking during the pandemic’s onset. As we’re exiting the pandemic, sales of alcohol are declining. 

• Restaurants & Bars. As the world opened-up after vaccines were introduced, local restaurants & bars actively spent to welcome back patrons. But today the market is back into a steady-state. Although ad spending is down 25% in the first half YoY from 2021 it’s more consistent with ad placement in 2019.

• Sweet treats. Dessert & sweets brands decreased their ad investment by 81% YoY. The Milk Bar, for example, is down 99% YoY and Krispy Kreme’s ad spend decreased 76% YoY. With people out of their home, we instead see a rise in ad spend for fitness activities. 

• Pet supplies. Pet ownership surged in the pandemic. With the initial costs of pet ownership complete (think shots, crates,etc) behind, advertising from pet advertisers is down 8% YoY through June 2022. June is down 7% YoY compared to June 2021.

Lean In

At a time when there is considerable worry about the economy, it is the right decision to study the current ad market. This is a good time to course-correct. What’s important however, and encouraging, is that there are many parts of the economy running strong. Our recommendation is to proactively lean into these segments to best navigate the months ahead.