Last week, Magna Global, a media agency that is part of the Interpublic group
Despite concerns about the economy, overall Magna still expects advertising dollars to grow for the remainder of 2022 and all of 2023. In the first half of 2022, with the Beijing Olympics, the US ad dollars increased 11% to a total of $151 billion. . In the second half of the year, with the midterm elections and the FIFA Men’s World Cup, Magna expects advertising spend to increase by 9.8%. When non-cyclical ad spend and political dollars are excluded, the increase is expected to be 8.1%.
For all of 2022, Magna forecasts that US ad spending will total $323 billion, surpassing the $300 billion threshold for the first time. In 2023, citing an anticipated economic slowdown, Magna revised down its year-over-year ad spend growth from +5.8% to +4.8%. Additionally, 2023 is politically a low year and there is no Olympics or Men’s World Cup (although the Women’s World Cup will take place next summer) impacting ad spend.
Summary of the first half of 2022: Magna reported first-quarter advertising dollar growth of 14% and second-quarter growth of 7%. Among the strongest media channels was outdoor advertising (+30%) as the country continued to reopen and people were more mobile. In the first six months of the year, Magna cited other growth opportunities as digital media, including search (+19%), streaming audio and podcasting (+19%), connected TV and ad-supported video streaming (+18%) and digital video short-from (+14%).
Conversely, advertising expenditure for social networks only increased by +3.2% in the first half compared to +38% in 2021. Vincent Létang writes: Social network applications continue to suffer from reduced access to user data in social iOS, which impacts the attractiveness and pricing power of social ad formats, while total social media usage has matured.
Despite the Beijing Olympics, linear TV ad dollars grew only 2% to $20 billion. Local broadcasting benefiting from a politically charged environment increased advertising revenue by 10% to a total of $9 billion. Excluding political ads, growth was a more modest 2%.
Second half of 2022: With inflation and doubts about the health of the economy, certain product categories will reduce their advertising budgets; including restaurants, retailers, mortgage and GIC companies. Political advertising will thrive, however, as campaign donations continue unabated. Magna predicts political ad dollars will rise 63% from the 2018 midpoints. Local TV will reap almost 70% of the largesse. Digital media will see a huge increase as candidates increasingly rely on connected TV, search, video streaming and social media. After cyclical events are eliminated, Magna expects ad dollar growth to be a more modest 6.6%.
For 2022 as a whole, Magna expects TV ad spend to grow 8%, with ad-supported video (AVOD) growing 22% year-over-year. Broadcasting benefiting from policies will also increase by 22%, with linear TV at -3%. All radios (terrestrial, digital and podcasts) should grow by 7%. The RHD and the cinema will experience a significant increase of +22% and +138% respectively. Search will increase by 17%, direct mail by +8% and social media will increase by 4%.
Forecast 2023: In terms of product categories, for 2023, Magna expects several verticals to bolster their ad spend budgets. These include entertainment as cinema continues to rebound and streaming video remains competitive, online sports betting (especially if California and other major states legalize it), travel and possibly automotive could experience a rebound after two lean years. Conversely, ad spend for CPG, financials and retail may not be as robust.
Looking at some media channels, Magna expects an ad-supported level to come to Netflix
Conversely, with politically local out-of-year broadcast, TV ad spend will drop 22.1% and national linear TV down 5.8%. Growth in billboard and cinema advertising spending will be more modest at +7.7% and +34.9% respectively. Ad spend for all audio will see a slight increase of 0.8%. Létang notes that digital signage and digital audio will be aided by programmatic buying.
Another growth driver will be retail media advertising. While ad dollars are modest compared to other channels ($42 billion in ad spend, up from $31 billion in 2022), Amazon