Audio ad spending is projected to grow 25% this year and another 5.8% in 2022. Those are two of the many predictions included in ad agency Magna Global’s latest forecast on the advertising marketplace. And both are upgrades. In June Magna thought audio ad spending would increase 10% this year and 3.9% next year. It credits a stronger than expected second quarter, especially among digital media, for the revisions. And while audio overall benefits from a comparison to last year’s soft spending levels due to the pandemic, Magna says digital formats like podcasting will have the stronger growth rate this year.
Its outlook says digital audio ad spending will grow 42.1% this year compared to a 15% growth rate for so-called legacy formats – mostly broadcast radio. And the growth rate for digital audio via mobile devices will be even higher at 43.7%.
“Pre-COVID, our long-term forecast for the share of digital ad sales was just 71%. We revised it to 81% in recent months as COVID triggered a step-function acceleration in the transition to a digital-centric media and marketing landscape,” says Magna in the report. “That includes the ad sales for all digital formats, made by pure players (the bulk of it) but also traditional media owners.”
Overall, Magna forecasts that total media spending will climb 23.2% this year with only search and social media having larger growth rates than audio. And next year the agency estimates total ad spending will increase another 11.6% when the ad market will total $310 billion – the first time ever it would be above the $300 billion mark. Magna expects the ad market will “gradually cool down” in the coming years although growth will continue – it predicts ad spending will climb 5.8% in 2023, 8% in 2024, and 3.4% in 2025 mainly due to cyclical events like elections and Olympics.
Even as Magna predicts radio ad sales will rise 17% this year to $11 billion, it also offers a fresh motivation for radio groups to embrace podcasting and other digital media. “As with most other linear media channels, the radio market will never fully recover to its pre-pandemic size,” the report says. “By the end of 2021, radio ad sales will be 20% smaller than they were in 2019,” it adds.
The forecast expects most major ad categories to return to pre-COVID marketing investment levels, as long as supply constraints affecting several of these industries do not continue to worsen, and that COVID restrictions that have impacted travel, restaurants and theaters continue to ease.
“The unprecedented growth in advertising spending in the first half was more than low comps due to the COVID lockdown and recession last year. It was caused by a unique combination of national brands reconnecting with consumers and competing for a limited amount of traditional media inventory, while the lasting changes of COVID on lifestyles and marketing methods continue to fuel huge digital advertising spending from both big brands and small businesses,” said Vincent Letang, EVP of Global Market Intelligence at Magna. “These ongoing organic growth engines, combined with Olympic budgets and the midterm election spending, will continue to generate double-digit spending growth in the second half and into 2022,” he added.