In early 2022, marketers entered the market with confidence, expecting to continue the strong recovery of the advertising industry, and looked to the future, actively promoting the broad prospects of electric vehicles, cryptocurrency, and the metaverse. However, when Russia invaded Ukraine in late February, this humanitarian crisis not only exacerbated existing inflationary and supply chain pressures but also made celebratory marketing messages difficult to calibrate, and the previous optimism quickly froze. Industry sentiment has yet to recover, and with the economic outlook becoming increasingly bleak in the coming months, the situation may worsen further.

The first half of 2022 did not open a new chapter for brand building as expected; instead, it left marketers in a wait-and-see mode once again. Creative innovation—which seemed on the verge of a revival—proved difficult to achieve. The dominant theme of the industry was not breakthrough innovation but risk avoidance, which may provide stability in the short term but could cause problems as the economy rapidly deteriorates and consumer loyalty is tested.

"There is a prevailing sense of uncertainty and fragility that is hindering decisions on some long-term investments," said Ewan McIntyre, vice president of marketing and research director at Gartner.

This risk-averse tendency in the first half of the year is understandable. The cryptocurrency industry suffered a major blow in the second quarter, leaving a vacuum in marketing activities; automakers, facing inventory shortages, were reluctant to aggressively promote vehicles they couldn't deliver. The metaverse was theoretically attractive, but aside from some lightweight gaming experiments, it remained far from practical application. Even the most enthusiastic advocates were tightening investments, shifting more focus to the fundamentals of existing businesses being tested amid changing privacy environments.

Experts point out that over the past six months, as macroeconomic obstacles have accumulated, more industry sectors have also leaned toward this back-to-basics strategy. Meanwhile, media spending and CMO budgets have remained generally stable, raising the question: where exactly are brands allocating their resources?

"We are indeed seeing brands that historically favored traditional large-scale events shifting toward programmatic, flexible investments," said Leslie Lee, senior vice president of marketing at digital out-of-home media software company Vistar Media. "The industry is moving away from those one-off, flashy events."

Shift toward performance marketing

Overall, things could have been worse. Just as the advertising market recovered faster than the broader economy last year, this year the advertising market has not fully kept pace with the sharp fluctuations in the stock market.

According to Magna's latest forecast, global advertising revenue is expected to grow 9% year-over-year this year, reaching $816 billion. This is a downward revision from the previous 12% growth target, but far from catastrophic. Other media agencies such as GroupM and Zenith have made similar adjustments to their full-year forecasts.

However, the numbers don't tell the whole story. Marketing spending did not decline significantly in the first half, but creative vitality was clearly lacking. Brand refresh campaigns were rare and mostly small-scale adjustments, sometimes drawing mockery on social media. A few anthem-style ads—especially from the cryptocurrency and Web3 sectors—sparked online buzz and earned praise, but ultimately failed to sustain due to the economic downturn and lack of genuine consumer interest.

Behind the scenes, a large portion of media investment showed a trend toward "performance tilt," said McIntyre. Areas like retail media continued to thrive as marketers tried to prove their investments yielded measurable results. Gartner's latest survey of chief marketing officers shows the ratio of brand budget to performance budget is roughly 50/50. This may be financially reasonable, but it hasn't generated many impressive marketing campaigns that stick in consumers' memories.

"Logically, this means you're putting nearly half of your media budget into 'last-click' media," said McIntyre. "It helps you achieve today's results, but it doesn't help build brand preference or support future performance."

Fragile growth

Looking at further breakdowns, industries known for outlandish marketing also noticeably pulled back in 2022. Quick-service restaurant (QSR) brands, which once stood out with aggressive social media personas and disruptive campaigns, have in recent months focused mainly on driving traffic to mobile, digital, and gaming channels—areas that have become increasingly important for sales growth during the pandemic. There has also been a notable turnover in leadership at both agency and CMO levels.

"QSR is a category where we see growth, but it's because they've shifted to programmatic media, basic audience targeting, and weather triggers," said Lee of Vistar Media.

Similarly, the business logic of this approach seems reasonable, especially when CMOs face increased pressure from higher-ups to tie marketing to growth. At the same time, McIntyre noted that much of the growth during this period was "fragile," and given the high turnover rate in CMO positions, they may be underinvesting in long-term plans.

"If your tenure is only 24 months and you intend to invest in the brand... then it's understandable that you'd focus more on things that can drive immediate revenue growth," said McIntyre.

However, if memorable brand images are not built now, as the shadow of recession looms, it could backfire on marketers and erase some recent gains. Sixty-eight percent of chief financial officers surveyed by CNBC expect a recession to arrive in the first half of 2023. In such a scenario, marketing is often among the first departments to be cut, making it even harder to execute any bold creative campaigns in the future.

"In an environment where consumers may be forced to reduce their choices due to economic conditions, loyalty will be crucial," said Siddharth Gopinath, senior vice president of financial services at Reach3 Insights. "Obviously, loyalty cannot be built overnight; it requires sustained attention and investment."

The impact of the crypto crash

If there's one industry that best exemplifies the ups and downs of the first half, it's cryptocurrency. Looking back at early February, this emerging financial services sector was at its peak. Super Bowl LVI was dubbed the "Crypto Bowl" by the media, with brands like STX, Crypto.com, Coinbase, and eToro flooding in, trying to break into the mainstream through television's most-watched event. Some ads did spark office chatter and online engagement, achieving legendary Super Bowl ad status.

However, as the crypto market entered a downward spiral in the spring, the meaning of these efforts became blurred. The extreme nature of the crypto industry—a company spending $7 million on a 30-second TV ad one month, then facing an existential crisis in its core business model the next—might explain why marketers are more cautious about bold attempts in the current environment, as opportunities can turn into stumbling blocks overnight.

The failure of the crypto industry is also attributed to strategic misalignment unique to the sector. Many crypto wallets, coins, and exchanges are not household names, lacking a loyal user base that could help companies weather the storm. Assuming that traditional media placements like the Super Bowl could quickly boost awareness now seems like a mistake, strongly echoing the "dot-com Super Bowl" phenomenon from which the "Crypto Bowl" name was borrowed.

According to MediaRadar estimates, cryptocurrency marketers' ad spending grew 94% quarter-over-quarter in the first quarter, but two-thirds of that occurred during the Super Bowl in February. In March, monthly spending by crypto brands fell to $20 million, dropping to $10 million in April, and now ads have almost disappeared as companies scramble to save themselves and drastically cut costs.

"I think they skipped a step, possibly because there was too much fast money in the space," said Jason Harris, co-founder and CEO of creative agency Mekanism, speaking about crypto brands. "Fast money may have led the industry to overestimate its growth prospects. When you're advertising for the legitimacy of the entire category, you're still seeking brand differentiation."

The last hurrah

As consumer wallets tighten and the bear market spreads, cryptocurrency is just one of many areas that may fall silent. Many executives had hoped inflation was a short-term issue, but that hasn't been the case, and its impact on marketing may become more pronounced in the second half of the year.

Fewer CMO resources means fewer agency resources—despite agencies' previous resilience—and also means a quieter media environment ahead of the crucial fourth quarter and holiday season.

"The typical way to address cost pressures often focuses on areas where spending can be cut," said McIntyre.

"Agencies and media will both be hit hard," he added. "Even the best creative is meaningless if it can't be put in front of consumers."

On the other hand, contractions in some areas in the first half have been offset by recoveries in others. For example, travel and entertainment are rebounding as people take advantage of relaxed pandemic restrictions. Summer box office is returning. Packaged goods have also remained largely stable, with some premium products still holding appeal despite soaring inflation.

"We're seeing much more focus on goods than services," said Lee. "From a marketing perspective, those products that would typically ramp up promotion this year, continuing the post-pandemic boom, are also seeing reduced ad investment."

U.S. political ad spending will also set records ahead of the competitive midterm elections, though the impact on consumer brands is not substantial, except to push thorny topics like abortion and gun control further into the national spotlight. The tiptoeing marketing attitude seen around the Ukraine war may also extend to these issues.

One reason the second half may be busier is third-party cookies. This cornerstone tool of digital advertising will be phased out next year, leaving marketers a limited window to adjust their strategies. However, the final cookie frenzy in the fourth quarter may only mask larger problems that could erupt in a gloomier January.

"This is the last hurrah for third-party data," said McIntyre. "Marketers would be wise to squeeze every bit of value out of it while they still can."