MAGNA: Ad Revenue Set To Pass $300 Billion For 2022, With Audio Up 7%.
Bolstered by a strong first half, and by political advertising propping up an otherwise economic-slowdown-impacted second half, U.S. ad revenues for full-year 2022 are expected to pass the $300 billion mark for the first time, actually reaching $323 billion, according to global media investment and intelligence company MAGNA's just-released forecast. The estimate represents a 9.8% or $29 billion increase from 2021 (+8.1%, excluding political ad dollars).
MAGNA's by-media breakdown for 2022 shows cross-platform audio, including radio and audio streaming, up a respectable 6.9% to $17 billion, although the first half showed it stronger with a 10.3% gain. “Cross-platform audio ad sales will increase as digital audio streaming and podcasting ad sales will offset the slowdown in [AM/FM] radio,” MAGNA Executive VP Global Market Intelligence Vincent Létang says.
The largest media gainers are cinema ads, up 138.3% as moviegoers and blockbuster films returned to theaters, followed by local TV up 22.3% due to political ad spend, national advertising-based video on demand (AVOD) including OTT and CTV up 22.1%, and out-of-home up 21.8%.“Following a strong first half, non-cyclical advertising spending is slowing down as several industries are facing an uncertain economic environment,” Létang says. “There are several growth factors that will help stabilize media owner ad revenues in coming months, however. Billions of ad dollars will be spent by political campaigns in TV, direct mail and digital media.”
Among the industries MAGNA sees impacted by economic uncertainty and rising inflation, where brands and local businesses may be driven to cut spending in 2022's second half, are consumer packaged goods verticals such as food, drinks, personal care and household goods, as they may need to increase prices and deal with consumers trading down in favor of cheaper brands. Similarly challenged are restaurants and retail, while industries like mortgage lenders may be negatively impacted by the rise of interest rates.
Overall, MAGNA expects non-cyclical ad spend to slow to 6.6% growth in the second half of 2022, although political should push that up, with 70% of its ad revenue accounted for during this period. Compared to 2018's midterm, MAGNA sees a 63% rise in political ad spend, generating $7.3 billion in additional revenue.
Looking ahead to 2023, the forecast is for a more conservative growth trend, with total media ad revenue up just 6.8% excluding cyclical spend (vs. +4.8% overall). Expected to drive this growth are retail media networks, where MAGNA sees advertising up from $31 billion this year to $42 billion in 2023, and AVOD's expansion with the launch of cheaper ad-supported tiers from Netflix and Disney+, contributing to 33% growth to reach $6.3 billion.
While MAGNA forecasts below-average growth for CPG, finance and retail advertisers in 2023, categories in recovery mode which should see greater ad spend gains include travel and entertainment, the latter due to consumers' returning to theaters and re-ignited competition in the AVOD space. There's hope for automotive to also veer closer to normal, pending the improvement of supply chain issues and production capacity, and for online betting to continue its spend growth with potential legalization in large states such as Ohio, Texas, California and Florida.