Another forecaster has slightly lowered its advertising outlook for 2022 due to the economic slowdown and geopolitical turmoil. This time it’s Magna, which says the U.S. ad market will rise 11% this year to reach an all-time high of $326 billion, including political. While that’s a small downward revision from its earlier forecast of +12.6% in March and +11.5% in December, it remains above the global average of 9% growth.
That’s because the U.S. is “relatively insulated from the economic consequences of the Ukraine war,” Magna says. U.S. media companies are also in line for a $7 billion bounty from record political advertising this year.
As seen in publicly traded radio’s first quarter reports, 2022 got off to a banging start with total U.S. ad revenues up 14%. Then came the Q2 slowdown. Magna now predicts US. ad revenues will grow 8% from Q2 through Q4.
In the U.S., audio is on track to grow 5.7% this year, a modest upward revision from 5.3% in Magna’s earlier forecast.
Direct digital media is expected to jump 14.0% to $195 billion in the U.S. But digital is not immune to the ad slowdown as the rest of the year will not keep pace with Q1’s growth of 16%. Search advertising (+18% to $116.7 billion) will eclipse social investment (+11% to $67 billion).
U.S. video ad revenues are expected to rise 8.0%. But broadcast television, continuing to suffer from the rapid erosion of linear viewing, is poised for a 4.1% year-over-year revenue decline while ad-based video on demand/OTT/CTV is set to surge 21.8%.
TV’s ad forecast is being tempered by strong pricing in the first half and extra spending around cyclical events like the mid-terms, Olympics, and the FIFA World Cup. In fact, most traditional media companies will see growth this year, including a 16.3% growth spurt for out of home. The exception is print which is expected to decline slightly (-2.9%).
Traditional media companies are deriving a growing percentage of ad revenues from digital formats. For radio and audio, that means digital investments are paying off as Magna says 20% of audio revenues came from digital in some markets, compared to an average 10% for TV and 50% for publishing. That’s helping publishers stabilize their revenues.
“Most of the headwinds facing the advertising market this year were expected: economic landing following a red hot 2021, continued supply issues generating inflation, and mounting privacy restrictions slowing down the growth of digital ad formats,” says Vincent Létang, Executive VP, Global Market Research, Magna. “On top of that, the war In Ukraine now exacerbates inflation and economic uncertainty. Nevertheless, Magna believes full-year advertising revenues will grow again in 2022 at a healthy rate, helped by a strong start to the year, on top of organic and cyclical drivers.
“Organic growth factors (continued and broad-based ecommerce spending, digital marketing adoption), strong cyclical drivers (record political spending in the U.S., Winter Olympics, and FIFA World Cup), and the strength of emerging or recovering industry verticals (Travel, Entertainment, Betting, Technology) will generate enough marketing demand to offset headwinds and keep the advertising economy growing in full-year 2022,” Létang added.