Digital ad spending "strong" in the fourth quarter, Wedbush says

Investing.com - Spending by advertising and marketing agencies on digital platforms was strong in the fourth quarter, potentially bolstering returns for major ad sellers like Meta Platforms (NASDAQ:META ) and Pinterest (NYSE:PINS ), according to a survey conducted by analysts at Wedbush.

Out of 200 US-based marketers responding to the study, 49% indicated that their digital ad expenditures rose by 10% versus the year-ago period, Wedbush said. In the third quarter, 43% reported the same level of growth.

Generally, over 80% spent more on digital ad spending, while 16% said the figure was flat and just 4% slashed their budgets, the Wedbush analysts noted.

"Our survey work indicates strong [year-over-year] growth in [the fourth quarter] and an improvement in advertiser sentiment versus our [third quarter] survey," the analysts said.

Expectations for the first quarter of this year also imply a "relatively stable" uptick in digital ad spending versus the fourth quarter, with 48% of the advertisers planning to expand their budgets by 10% or greater, Wedbush said.

Social media is expected to be the largest destination for digital ad spending, ahead of streaming video, search engines, and retail media, the analysts added.

They argued the numbers augur well for Meta, noting that 54% of advertisers on the company's platforms reported spending growth of 10% year-on-year or more in the fourth quarter -- up from 40% in the third quarter.

The analysts said the results point as well to "materially stronger growth" at image-sharing firm Pinterest, which also relies heavily on digital ads but has faced fierce competition from rivals like Meta who can offer bigger user bases. Out of respondents who advertise on Pinterest, 65% said they planned to raise their spending by 10% in the fourth quarter, a jump from 45% in the third quarter.

The survey comes after GroupM previously forecast that global advertising expending will surpass $1 trillion in 2024 -- faster than earlier predictions that it would hit the mark in 2026.

Source: Investing.com