Halfway through the year, GroupM has slightly lowered its global ad forecast for 2022 in response to geopolitical turmoil and fears of a recession. The ad agency giant now expects advertising around the world to grow by 8.4%, excluding the impact of U.S. political advertising. That’s down modestly from the 9.7% increase it forecast in December 2021.
“Coming off the lows of 2020 and the highs of 2021, the advertising market is settling into 2022, a year that’s seeing rising inflation, increased wages, mounting regulatory pressure on Big Tech and an overall effort by consumers and marketers to find their footing in a world that’s getting increasingly used to living with COVID-19,” GroupM says in its 2022 Mid-Year Advertising Forecast.
While most marketers are still adding to their media budgets in 2022, the forecasters have identified a key difference between this year and last year: the rate at which ad growth is occurring for older marketers is slower, while there are fewer new marketers emerging than in 2021.
While rising consumer price inflation is on track to average nearly 7% this year in the global markets GroupM covers, it doesn’t expect “a perilous economic state.” In fact, underlying growth “should outpace that of 2019, even if some parts of the world do end up experiencing an economic downturn,” the forecast says.
As long as inflation-adjusted economic growth is positive, GroupM believes that inflation should be a positive contributor to advertising growth. “If economy-wide inflation runs hotter than we expect this year, so too should our forecasts for advertising because of the general impact inflation has on advertiser budgets,” Group M says in its semi-annual “This Year Next Year” forecast. “This should be true so long as any central bank interest rate increases do not cause reductions in investment or other sources of company expansion.”
Audio: ‘Much To Be Positive About’
On a global basis, GroupM says audio – in its broadest definition – may still need more time to fully recover, since the industry is still mostly built around local advertisers who represent a shrinking share of the broader economy. “Still, there is much to be positive about the broadly defined medium, especially with the evolution of newer digital services from traditional broadcasters, including Spotify and others that offer podcast advertising, for example,” the report says.
Pure-play digital advertising platforms are on track to grow 11.5% worldwide during 2022, down from GroupM’s previous 13.5% forecast. Overall, pure-play digital advertising (which excludes both spending by advertisers on digital extensions of traditional media and U.S. political advertising activity) represents 67% of the industry’s total this year and should hit 73% in 2027. Consider that only five years ago, that figure was 43% and ten years ago it was 20%. The forecast calls for total digital ad spending to exceed $563 billion in 2022. When traditional media’s digital extensions are added in, the industry will account for $618 billion in 2022, or 73% of its total.
‘More Limited Growth’ For Television
Meanwhile, after recovering during 2021 with double-digit growth, the forecast for television is for “more limited” but still solid growth of 4.4%, excluding the impact of U.S. political advertising. “We are increasingly persuaded that some incremental growth has come to television from new advertisers enabled by the advent of connected TV,” the report states. In other words, connected TV services such as Pluto, Tubi, Roku and other single-country streaming offerings have likely redirected some money that might have gone into digital media platforms to consumers’ TV sets instead.
Continuing to rebound, outdoor advertising is progressing toward pre-pandemic levels in most parts of the world. “Early 2022 has been strong as audiences have returned, people spend more time enjoying life out of the home again and new movement patterns emerge,” Group M says. Also helping outdoor are new brands, the rebounding travel category, and advancements in data-driven targeting. The forecast is for “a slight decline” in outdoor advertising during 2022, which the report attributes entirely to current weakness in China, which once was the world’s largest OOH market. Excluding China, growth should amount to 14.3% in 2022.
The factors that have contributed to a year’s long decline in newspapers and magazines, especially the competition from digital publishers is expected to continue in 2022.
As for U.S. political advertising, GroupM estimates a total spend of $13 billion in 2022, up modestly from $12 billion in 2020, but up significantly from 2018’s $6 billion.
Read GroupM’s mid-year forecast HERE.