If you’re over 30, you’ve survived at least one recession (not including the manmade disaster that resulted from COVID-19 panic and its attendant shutdowns). So you know there are certain things that occur during these periods of economic contraction. Whether or not the White House cares to refer to the current situation as a recession, the fact is that between the crushing inflation, soaring interest rates, and unaffordable fuel prices, individuals and businesses are getting clobbered. And they are changing their behaviors.
CEOs have been battening down the hatches in preparation for a recession, which almost always follows an interest rate hike…which almost always follows inflation…which almost always follows dumping trillions of extra dollars into the economy… My point is that much of this is predictable. And now, another predictable hallmark of recession has materialized: companies are tightening up their advertising budgets.
“Google’s revenue growth during the past quarter decelerated to its slowest pace in two years as advertisers reined in their spending amid intensifying fears of an economic recession,” reports The Hindu (an excellent English-language paper published in India). Slowed rates of growth aren’t exactly the same thing as contraction, but they’re definitely a sign that things are heading in the wrong direction. Google parent Alphabet’s April–June revenue increased 13% from the same time last year, which is great until you consider that it increased 62% the previous year.
Advertising sales lagged behind Alphabet’s overall slower revenue increase. “Advertising revenue increased just 12% to $56.3 billion, as marketers reeled in their spending to manage inflationary pressures,” reports CNBC. “The most notable deceleration was in the YouTube division, where sales rose 5% after jumping 84% in the same period a year ago.” Google’s ad revenue fell short of its Q2 target by $380 million ($56.29 billion actual versus $56.67 billion projected) after missing the Q1 target by $100 million.
The drawdown isn’t just limited to digital ad sales. MediaPost is reporting that TV advertising could shrink almost 10% this year and 5% the next.
With a strong probability of a recession to start by the end of year, according to many analysts, a new estimate projects that a downturn in the economy could drive a 9.6% decline in TV advertising this year to $78 billion, according to MoffettNathanson Research.
An estimate with no recession projects total TV advertising would rise 6% to $86 billion — from $81 billion in 2021.
MoffettNathanson also projects that a possible recession, beginning this fall, would last throughout 2023 — about five quarters in total duration. For next year, that would mean another 5% decline to $74 billion for total TV advertising.
With these projections, TV would not recover until 2024 — a Presidential election year, when it would see a boost from political and Olympics advertising revenue.
The same article predicts digital advertisers in the United States will maintain growth through this period, but the expected recession will cool it down to below where it should be, to just 5% this year and 6% the next — not even keeping up with still-galloping inflation.
Related: BREAKING: Inflation Soars to 9.1 Percent, Worst Since 1981
Unreliable ad revenues are a motivator for many news and entertainment providers to push subscription models, but these aren’t a new concept. Many PJ Media readers are, like myself, old enough to remember the dark ages before everything was online. When we wanted to read a newspaper or a magazine, we subscribed to it or bought it off something called a “newsstand.” And even though we paid for our subscription, those periodicals also had ads in them. The nerve!
I’m concluding this report with a reminder that VIP memberships are our bread-and-butter here at PJ Media. When Big Tech throttles our traffic so we don’t get paid as much by advertisers, or when the Global Left’s horrific economic policies bring recession and less ad income, we depend on our VIPs’ support to keep the lights on. If you’re not a VIP member yet, please consider joining up.
“But, Athena — there’s a recession on! I can’t afford it.”
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