The advertising industry, like a dinner guest who arrives looking impeccably dressed but keeps glancing nervously at the weather outside, has entered the fourth quarter in what might be described as guarded optimism.
The major agency holding companies have reported their third-quarter results, and the numbers are, by most measures, encouraging. Publicis Groupe posted 5 percent organic growth. Havas recorded 2.4 percent. Omnicom, the largest of the American holding companies, charted 7.3 percent organic growth — though it declined to offer guidance for the fourth quarter, a notable omission given the strength of its year-to-date performance. (One might wonder what Omnicom's executives know, or suspect, that they are not yet prepared to share.)
Arthur Sadoun, the chief executive of Publicis, told analysts he expected similar momentum through the end of the year. "We could be close to 5 percent for the full year, if the macro economy gets better," Mr. Sadoun said during the company's earnings call. "That's what we're expecting."
The money, according to updated forecasts from WARC, is flowing toward familiar destinations: social media, video and search. Social spending alone rose 21.3 percent in the third quarter. Meta's advertising revenue climbed 26 percent. Retail media networks operated by Amazon, Walmart and Target continue to attract dollars that might once have gone to linear television, which, according to several agency executives, is expected to decline 5 to 7 percent year over year.
"In Q4, if it can't be measured, it isn't making the plan," said Sarah Engel, president of January Digital. Scott Shamberg, chief executive of Mile Marker, an independent media agency, said his clients had increased retail media spending by 20 to 30 percent, much of it pulled from television budgets.
Yet the picture grows murkier the closer one looks. A Madison & Wall analysis of Omnicom's results suggested that much of its growth could be attributed to cost-cutting — closing agencies, reducing staff — rather than new business. In the United States, advertisers are watching the midterm elections with particular anxiety, mindful that consumer confidence sits near record lows. Wendy Mason, senior director of strategy at the independent agency Moroch, said many clients were "holding their breath" until the results are known.
The fourth quarter, in other words, looks healthy enough from a distance. Whether that health survives contact with actual consumers remains, as ever, the industry's annual question.
Original story published in Digiday: "Media Buying Briefing: Brands push toward retail and social while buyers ponder storm clouds"