With Netflix and Disney+ launching an ad supported tier in the months ahead. Magna forecasts ad … [+]
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Last week Magna Global, a media agency that is part of Interpublic GroupIPG
(IPG) released their latest forecast for the U.S. advertising market covering 2022 as well as an update for 2023. This is a revision from Magna’s last report issued in June. The report was written by Vincent Létang, EVP Global Market Intelligence at Magna. The next forecast will be released in December.
Despite concerns about the economy, overall Magna still projects an increase in ad dollars for the rest of 2022 and all of 2023. In the first half of 2022 with the Beijing Olympics year-over-year U.S. ad dollars grew by 11% totaling $151 billion. In the second half of the year with mid-term elections and FIFA Men’s World Cup, Magna projects an ad spend increase of 9.8%. When non-cyclical ad spending and political dollars are excluded, the increase is expected to be 8.1%.
For all of 2022, Magna projects U.S. ad spend will total $323 billion, exceeding the $300 billion threshold for the first time. In 2023 citing an anticipated economic slowdown, Magna revised its year-over-year ad spend growth downward from +5.8% to +4.8%. In addition, 2023 is politically an off- year and there are no Olympics or Men’s World Cup (although the Women’s World Cup will take place next Summer) impacting ad spending.
First Half 2022 Recap: Magna reported in first quarter ad dollar growth was 14% and second quarter growth was 7%. Looking at media channels among the strongest was out-of-home (+30%) as the country continued to re-open and people were more mobile. Over the first six months of the year Magna cited other growth outlets as digital media including search (+19%), audio streaming and podcasting (+19%), connected TV and ad supported video streaming (+18%) and short-from digital video (+14%).
Conversely, the ad spending for social media grew by only +3.2% in the first-half of the year compared to +38% in 2021. Vincent Létang writes: Social media apps continue to suffer from the reduced access to user data in the iOS environment, which impacts the attractiveness and pricing power of social ad formats, while total social media usage has reached maturity.
Despite the Beijing Olympics, linear TV ad dollars grew by just 2% to $20 billion. Local broadcast TV benefitting from a politically charged environment increased ad dollars by 10% totaling $9 billion. When political ads are excluded, the growth was a more modest 2%.
Second Half 2022: With inflation and doubts about the health of the economy, some product categories will scale back on their ad budgets; including restaurants, retailers, mortgage companies and CPG. Political advertising however will thrive as campaign donations continue unabated. Magna projects political ad dollars to increase by 63% from the 2018 midterms. Local television will garner close to 70% of the largesse. Digital media will have a sizable increase as candidates rely more and more on connected TV, search, streaming video and social media. When cyclical events are eliminated, Magna expects ad dollar growth to be a more modest 6.6%.
For all of 2022 Magna forecast the ad spending for TV to increase by 8%, with ad supported video (AVOD) increasing year-over-year by 22%. Broadcast TV benefiting from political will also increase by 22%, with linear TV at -3%. All radio (terrestrial, digital and podcasts) is projected to grow 7%. …….