Earlier this month, Madison and Wall, the Portland, Ore.-headquartered local advertising-focused financial analysis house led by Brian Wieser, found “a much stronger than expected” growth rate for advertising — ex-political — is being seen domestically thus far in the second quarter.
Now, the team led by Vincent Létang has issued a report that backs up Wieser’s assessments, concluding that full-year non-cyclical ad spend will grow by 8.9% — up from its previous prediction of 8.2% growth.
For MAGNA, this represents one of the best performances in 20 years.
That said, the headwinds will continue for broadcast radio companies.
For MAGNA, “a stronger macro-economic outlook, the momentum of digital media and streaming TV, and the impact of cyclical events,” led MAGNA to raise its second-half ad spend forecast.
For investors in radio broadcasting companies, particular scrutiny may be placed on the determination that a stronger macro-economic outlook has been given. For more than four years, CEOs and CFOs have lamented “macroeconomic forces” and outside challenges as reasons for revenue weakness in their quarterly reports.
Could the stronger macro-economic outlook that MAGNA is seeing finally bring broadcast radio out of its doldrums?
Not exactly. Audio ad sales will rise 1% to $16 billion in 2024, but this is largely the result of a forecast for 6.9% growth in audio streaming and podcasting.
An erosion in broadcast radio ad sales is predicted, with 2024 finishing down 3.5% for AM/FM radio stations.
Furthermore, while the advertising market will remain strong in 2025, radio sales will drop by 0.8% next year, MAGNA says.
Commenting on the overall U.S. ad market’s performance, Létang, who serves as EVP/Global Market Intelligence at MAGNA, said, “Even without the incremental advertising spending generated around cyclical events, 2024 already looks like a strong year for the U.S. ad market, growing by almost 9%.”
This, Létang explained, is due to strong demand from brands, in a stable economy, and supply-side innovations such as the rise of ad-funded streaming and retail media offering more scale and return-on-investment to marketers. “On top of that, the additional advertising demand generated around Olympic Games Paris 2024 and the U.S. presidential campaign will add a record $10 billion of cyclical ad sales to bring total media owners ad revenues to an all-time-high of $377 billion.”
Thus, with non-cyclical advertising sales already growing by 10.6% in the first half of 2024, “the current attractiveness of the media offering, robust demand from CPG advertisers,
and a solid macro-economic outlook” lead MAGNA to raise its forecast for second half, non-cyclical ad spend growth to 7.4%, from 6.4%.
TELEVISION REVENUE VISIBILITY
Within traditional media owners, non-cyclical national television sales ad will drop by 1.7% to $46 billion; MAGNA notes that the decline is far less than what has been seen in previous quarters.
But, it noted that broadcast and cable networks will fall 6.8% while streaming video sales will grow by a strong 19.3% to $11 billion and account for nearly 25% of the total market.
Non-political local TV sales will drop 3.9% to $17.3 billion, but total ad revenue will grow by 25% when including political ad sales, MAGNA explained.
THE BIG PICTURE
- Based on MAGNA’s analysis of media companies’ financial reports, total U.S. ad revenue grew by 11% year-over-year in Q2. This was in line with Q1 and slightly stronger than MAGNA’s previous 10.4% growth projection.
- Digital pure player ad sales rose by approximately 16% year-over-year.
- Traditional media owners’ sales, excluding cyclical dollars, declined by 1.3% year-over-year.
- National ad sales continue to lag, while local ad sales are more dynamic.
- In a positive economic environment, several industry verticals showed double digit increases in total advertising spending in the first half including Finance/Insurance (all-media growth of 24% compared to the same period of 2023) and Automotive (+22%).
For the full-year 2024 MAGNA is now expecting advertising revenues to grow by 11.4% to $377 billion (up 8.9% excluding cyclical).
“To find faster growth we need to look all the way back to the year 2000, when the U.S. ad market rose by 10.8%,” MAGNA says.
Still, this is the result of double-digit growth for digital pure players as traditional media owners “manage to stabilize ad sales.”
As this compares to a mid-single-digit rate of decline in recent years, perhaps that’s good news for all — except Radio.
THE 2025 OUTLOOK
Non-cyclical ad spend will grow 6.3% to $391 billion, as the market heads towards $400 billion in 2026. “However, given the lack of cyclical events in odd-numbered years, total ad sales (inclusive of cyclical dollars) will rise only 3.9% above 2024,” MAGNA says.
Digital pure players will again drive the market, growing 9.3% to $289 billion, while traditional media owners will erode by 1.5% to $102 billion. Search/commerce and social media will gain 10%, and the two channels will account for two thirds of all advertising in the country.
Most other channels will not perform as well.
- National television sales will drop 2.7%
- Local television sales will underperform and decline by 3.6%
- Radio sales will drop by 0.8%
The next MAGNA ad forecast (U.S. and Global) will be published early December.
