Despite a slow start to the year for advertising, ad agency GroupM is sticking with much of its original predictions for 2023. For audio, it forecasts a nearly flat year worldwide with global audio ad billings expected to inch ahead 0.3%, thanks in large part to podcasting and streaming radio. “Growth will remain flat as we do not expect audio to regain pre-pandemic revenue [levels] despite the continued growth of digital audio, which is estimated to increase revenue 10.9% in 2023 and reach $9.9 billion in 2028,” GroupM says in the report.
“The growth of digital audio and the introduction of more sophisticated measurement tools is lending greater accountability to audio, especially when tracking podcasts,” the WPP-owned agency says in its 2023 Global Mid-Year Forecast. “Traditional radio players remain limited in their ability to serve on demand content, and the glut of station identification names for terrestrial radio owners proves to be a branding detriment compared to the likes Spotify and Pandora, with singular consumer-facing identities.”
Beyond just audio, the report forecasts global digital pureplay ad revenue will increase 8.4% this year and will account for 68.8% of the ad spend total worldwide in 2023. GroupM predicts it will reach 74.4% of total ad revenue by 2028. While the pace of growth is not as big as it once was, the agency says single-digit growth should be thought of more as a function of the size and maturity of the digital marketplace rather than a recessionary environment.
“Halfway through 2023, we’re still dealing with rising inflation and adjustments to consumer behaviors brought on by the pandemic. As we look ahead to the rest of the year, we should expect a return to some kind of normalcy in terms of advertising revenue growth,” the agency giant says in the updated forecast.
Among other media, GroupM’s mid-year update now predicts television spending will shrink 1.2% this year and print spending will fall 4.8% while out of home media will grow 12.7% and retail media spending will increase 9.9%.
Overall, GroupM has adjusted its U.S. outlook down on an ex-political basis to 5.1% from the 5.5% it projected in December 2022. U.S. audio ad revenue is forecast to decline 2.2% in 2023 to $14.4 billion from $14.7 billion in 2022.
The agency giant expects overall media ad growth to continue at a five percent pace next year.
“We are at an inflection point where the secular drivers of advertising growth above and beyond GDP growth are maturing, the pandemic upheaval is receding and the dynamic rise of digital advertising has slowed. This is the basis of our underlying forecast of mid-single-digit advertising growth over the next five years,” the report says.
Worldwide, GroupM says its 2023 growth outlook remains unchanged from its December forecast of 5.9% growth. It expects global advertising this year to total $874.5 billion, excluding U.S. political advertising. That is slightly lower than the seven percent inflation rate predicted by the International Monetary Fund. Blossoming automotive ads are expected to help, as the vehicle market recovers from the pandemic.
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