To assess the current state of media planning and buying and to understand which channels clients are investing in now and where they will be spending in the future, Digiday+ Research collected responses from 111 agency participants in a survey fielded in August/September 2023.

For additional industry insight, Digiday hosted a roundtable  of eight senior media agency executives who oversee media investment at holding company-owned and independent media agencies to gather first-person accounts of client spending.  The full report is attached.  Topline conclusions are summarized below, along with comments from roundtable participants  PHD USA Chief Investment Officer Katie Klein and Omnicom Media Group  Managing Director for Digital Activation Ryan Eusanio.

1. Due to a turbulent economy, much of clients’ 2023 spending remained at 2022 levels 

2. Agencies show tempered optimism for 2024, with nearly half expecting budget increases

3. Sports may be the winner – especially for video spending – as strikes and elections loom

“In the national space, we have clients that are exercising caution, just from a content standpoint,” said PHD’s Klein. “Clients that historically are more comfortable airing in cable news are worried about what the climate is going to be. We definitely want to make sure that there is a very thoughtful approach to that, because that audience is still very valuable for some clients, but the environment and the content is definitely a concern.”

4. DTC and e-commerce clients shift spending the most, in both directions

5. Client spending is set to accelerate in social, search and display

6. Despite brand safety risks and ethical concerns, agencies see a future shaped by AI

7. Streaming video and retail media benefit from budget increases, as marketers give print a second look

When [retail media] first started exploding, we saw the obvious clients going for that data, like CPG,” said Ryan Eusanio, managing director of digital activation at Omnicom Media Group. “Now we’re seeing a much wider aperture of clients realizing the value of retail media data.”

“It’s not just about [a client saying], ‘Let me find a recent purchaser of the same category that I play in and use retail media data for that really specific trade budget,’” he added. “But rather, ‘I’m an insurance company and I want to find people that just moved into a house, so I can look at the items that people are purchasing.’ We’ve seen a big shift there in terms of the applicability of retail media data on our client side.”

Conclusion

As agencies enter the fourth quarter of 2023 and look forward to 2024, they’re feeling cautiously optimistic about client spending as they bid farewell to a year that started off economically rocky and head into what they hope will be a steadier immediate future.

Some inflationary concerns still linger, however, and agencies expect to continue to see clients shift spending to digital channels — particularly social media, search marketing and display advertising — as they remain the easiest categories to quickly move funds in and out of during periods of economic uncertainty. Likewise, agencies expect digital-first DTC and e-commerce clients to be the top client categories to increase spending in 2024, continuing a trend agencies have already seen in 2023.

Other spending trends are harder to predict, even for the most experienced agency leaders. The future effects of the writers’ and UAW strikes, along with the upcoming 2024 Olympics and elections, are all great unknowns. However, as the writers’ strike concludes, most focus groups executives said they believe the entertainment industry will rebound quickly — with a further impact on TV and streaming video spending.

As agencies look to the future, they’re also cautiously experimenting with AI tools. Although generative AI is the leading type of AI used by survey respondents, it brings with it a range of ethical and brand safety concerns. But broader AI usage and experimentation by agencies will continue, particularly, as noted by focus group executives, when it comes to non-consumer facing applications like data analytics.