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B2B Ad Sales Lag B2C as Tech Spending Remains Muted: Report

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By: Christiana Sciaudone

If you’re going to be in media, the general consensus is that niche and B2B is where it’s at. Those publications have known audiences who tend to be fairly loyal because they often aren’t getting their information anywhere else.

And yet, according to consultancy Plural Strategy Group, ad sales growth in B2B media is lagging expectations and B2C growth is outpacing initial forecasts for the year.

B2C is doing better thanks to a stronger than expected economy, inflation that has weakened and the initiation of lower interest rates, Jonathan Dufton, a partner at Plural Strategy, told AMO. The tech sector ramped up ad spending during peak Covid years with a growth at all costs mindset. That was good news for ad sales of all kinds, until that spending got cut with an tech industry-wide refocus on profitability. At the same time, budgets were diverted to events, which have been performing well.

“While B2B budgets were anticipated to rebound this year, they have remained relatively stagnant, particularly in the technology sector; this has led Plural to readjust the B2B forecast growth from 4% to 2% 2023-24,” the consultancy wrote in its updated October report.

Tech sector advertising was key for B2B in Covid, when the industry was in “full growth mode,” Matthew Vellacott, a partner at Plural Strategy, told AMO. “They were committing lots of their marketing budget to that, and then the interest rates carried on going up and up and up, and there was lots of uncertainty in the market and those companies stepped back.”

“The component of tech that is in the B2C part of the market is smaller than what it is on the B2B side,” Dufton told AMO. “That’s reflected in the end to a bit more of a challenging sort of environment for B2B properties, with a skew towards the tech side, where they’ve probably had it more tough than some of the other segments.”

Plural Strategy revised its forecast for B2C to 5% from 4% as marketing spending in the first half of the year slightly outperformed expectations driven by better-than-expected macroeconomic conditions. The growth is evident in consumer packaged goods while tech, pharma and retail continue to struggle, Plural said.

“It’s definitely a challenging environment,” Tagg Henderson, owner and co-chief executive officer of BNP, a B2B publisher, told A Media Operator last month. “They're really, really, very focused on ROI and particularly around leads that we can deliver to them.” 

Just because BNP Media has highly-targeted audiences in architecture, construction, food and beverage packaging and security, among others, isn’t enough with budgets being tight.

Last month, Henderson said: "We're really leaning into using our content and using advertisers' content to push people through the sales funnel for them and deliver leads to them in a way that is really delivering high quality leads, somebody that really wants to engage, really wants to have a meeting with them, really wants to learn more about their product, not just here's a bunch of people who saw your ad or here's a bunch of people who clicked on, clicked on something. The world of just pure display advertising branding is definitely very challenging, but when you get into talking about how we can deliver high quality leads to a customer, that's really when I see our customers really lean in and lean forward and want to have a bigger conversation.”

The International Monetary Fund revised the U.S. GDP forecast to 2.6% for 2024, up from a previous expectation of 2.1%, Plural said. 

“This positive shift reflects a growing optimism among consumers, which has translated into increased spending across various sectors. Businesses are responding by allocating greater resources to their sales and marketing initiatives,” Plural Strategy said.

Growth in B2C spend has been strongest in relatively nascent channels like retail media networks, advertising infrastructure that includes digital channels like websites and apps offered by a retail company to third-party brands for their various advertising purposes, according to Amazon. 

For the third quarter, Gannett “experienced strong growth in digital advertising,” Doug Horne, chief financial officer at the company said on an earnings call last week. “We believe the growth in digital only subscription and digital advertising, combined with the actions that are being taken to improve the [digital marketing services] trends will result in improvements in top line trends to close out the year.” 

He added that September marked Gannett’s best performing month of the quarter, indicating a strong close to 2024.

There had been expectations that tech would show some recovery in 2024, but that has failed to materialize. There is renewed optimism heading into 2025, driven by improving macroeconomic conditions, including interest rate cuts, Plural Strategy said.

At B2B publisher HW Media, which covers the housing market through different media and data offerings, the outlook is for a better 2025.

“It's still relatively early, but we're seeing more exuberance, more larger opportunities, faster renewals in this cycle than we saw last year at this time,” Clayton Collins, chief executive officer at HW Media, told AMO last month.

“When we've spoken to marketers, they tend to be positive about the midterm. It's just a question as to exactly when some of that budget gets unlocked,” Dufton said. 

On the bright side, Plural reported strong spending on in-person events has been maintained as the channel continues to bounce back from the pandemic, reaffirming the importance of face-to-face communications. They also noted that a data-centric approach to marketing is of continued importance.

“With constrained budgets, focus is on short-term ROI, putting large transformation projects on hold,” the consultancy said. “Marketers are seeking support from agencies and media partners on AI and advanced analytics where in-house teams have capability gaps.”