Media intelligence company Magna's just-released global advertising forecast pegs audio's share of net ad revenue at 4.9% in 2023, with a projected $16.4 billion in the U.S. Compared to 2022, that's a 1.7% decline, although the crystal ball for 2024 shows an expected 1.6% rebound.
Audio appears to be more stable, if not as strong, globally. Magna's forecast shows it with a lower 3.4% share of total ad sales, at $28 billion, off by only 0.5% from last year with expected growth in '24 at 1.1%.
The overall U.S. ad forecast shows all media net ad revenue at $333.8 billion, up 2.5%, with a 7.3% lift for 2024. Magna says that while ad spending “stagnated” at the end of last year and during the first few months of this year, it says spending “will likely accelerate” during the second half.
“What we're seeing is not particular to audio, but a general ad market slowdown,” Magna Director of Global Market Intelligence Michael Leszega says. “Podcasts still grow by 10% in the quarter, but compared to what we’ve been seeing, it’s slower growth… We have seen nothing immune from the slowdown in the ad market,” he said.
There is also something to give traditional radio reason to be optimistic this year. While national advertisers are pulling back, Leszega said smaller brands – which are typically the lifeblood of radio and digital audio alike – are in a better position. “They still seem to be performing at a higher level than big national companies,” he said. “When we look specifically at local media channels, national advertisers are struggling compared to local advertisers, [and] there's been a reduction in national advertising spend from big brands,” Leszega added.
Where are those ad dollars going? “During times of economic uncertainty, we see advertisers shift to lower funnel media channels,” Leszega says. “There is nothing lower funnel than search, and to an extent social media, [and] we noticed in this quarter that social media rebounded. Advertisers in general would shift from not only local TV, local radio, [and] probably also national TV to something like search and social.”
And when the impact of last year’s political and Olympic ad spending bumps are factored out, Magna says total U.S. ad spending is on track to grow 4.2% this year.
“The big picture is the economy is slowing down. But despite that, advertising revenues remain resilient,” said Luke Stillman, SVP of Global Market Intelligence at Magna. “In almost every region, the economy is growing more slowly this year than it did in 2022. But importantly, so far, this is a slowdown – not a recession.”
Magna's global forecast, based on monitoring ad spend trends across 68 countries, 15 media types and 16 industry verticals, projects that ad revenue for traditional media (including audio, TV, publishing, out-of-home, and cinema) will shrink by 3% to $264 billion, with the only growing categories OOH, up 5% to $31 billion, and cinema, up 23% to $2 billion. At the same time, digital pure-play ad sales will get an 8.5% boost to reach $577 billion, translating to 69% of total ad sales.
Another bright spot in the forecast is for retail media networks, which are expected to bring in $121 billion in ad sales for a 12% lift, mostly in the form of product search and e-commerce sponsorship.
As for which ad categories should lead the way in 2023, Magna points to retail, buoyed by consumer resilience, travel helped by the post-pandemic recovery, and entertainment, benefiting from an increasingly competitive streaming landscape. Leszega said that while auto ad spending is still expected to rebound, it has yet to pop.
Magna’s predicted 2024 rebound is based on a re-acceleration of ad spend driving by major events such as the U.S. Presidential elections, the Paris Olympics, and the Euro football championship, resulting in traditional media owner ad revenue up 1%, while digital increases 8%.
As for how radio fits into the media picture going forward, Leszega says, “[While] we do not see terrestrial radio as a growth medium, [it] will continue to have a place in the local advertising market. When brands want reach, radio will remain a thing, as television becomes harder to find reach in as more people cut the cord and shift to ad-free alternatives.”