After a strong start of the year, advertising spending will be slowing down amidst economic uncertainty.
That said, MAGNA Global predicts “organic and cyclical” growth factors will support marketing activity and advertising demand.
It’s one of the chief takeaways from the just-released June 2022 Global Ad Forecast from MAGNA, which saw Q1 2022 ad spending rise 14% year-over-year. For Q2 through the remainder of 2022, growth is expected to become more tepid, coming in at 8% year-over-year based on the same period of 2021.
While some may say any growth is a good thing, the percentage of growth for linear media compared to other forms of communication — namely digital media — remains a growing concern, no pun intended.
These struggles are being seen across the globe, and not just in the U.S. MAGNA forecasts the advertising revenue of traditional media companies will grow in most media. Television and Audio will both rise by 4%. But, Out-of-Home is forecast to increase by 10%.
Then, there is the digital video story — one told by other ad forecasters. Digital advertising sales will grow by 13% this year to reach 65% of total ad sales, MAGNA predicts. And, it shares that Digital Video will be the fastest-growing ad format (+16%), followed by Search (+15%), and Social (+11%).
How important is digital, even for linear media? Traditional media companies are deriving a growing percentage of advertising revenues from digital formats (AVOD, CTV, audio streaming and podcasting), MAGNA says. “In some markets these are already contributing 10% of ad revenues in TV, 20% in audio media, and 50% in publishing, stabilizing revenues for publishers,” MAGNA adds.
For linear television, advertising is suffering from the “rapid erosion” of traditional viewing worldwide, MAGNA adds. This is offset by growing AVOD revenues, strong pricing in the first half, and extra spending around cyclical events such as the U.S. mid-term elections, Olympics, and 2022 FIFA World Cup.
In the U.S. the ad market will grow above average — +11% to $326 billion. This is only slightly below MAGNA’s previous expectations for 2022 (+12.6% in March, +11.5% in
December).
Why? MAGNA believes it is “relatively insulated from the economic consequences of the Ukraine war” and is boosted by record political advertising, expected to be $7 billion this year.
That said, economic uncertainties fueled by high inflation, rising 30-year mortgage rates, record-setting gasoline prices and poor employment figures have rattled Wall Street, impacting radio companies, in particular.
Thus, the U.S. may have its own economic warfare ahead independent of what Moscow is up to, even as cross-platform audio advertising (broadcast radio, audio streaming and podcasting) will grow by +5.7% to $16.8 billion.
Entertainment and Travel will be among the main drivers for advertising spending growth in 2022. CPG categories (Food, Drinks, Personal Care, Off-the-Counter Pharma) may stagnate or decrease ad budgets this year.
U.S. ADVERTISING REVENUES
