MoffettNathanson is updating its 2022 U.S. ad forecast and the revision offers a more upbeat outlook for radio. After earlier calling for a 3.0% decline in radio revenue, the firm is now calling for the exact opposite: a 3% year-over-year gain. Its latest model estimates call for $16.57 billion in radio industry revenues this year, up from $16.09 billion in 2021.
Radio’s 3.0% gain outperforms the 2.4% lift MoffettNathanson is calling for traditional media as a whole to experience in 2022.
However, the updated 2022 estimate is 3.4% below the $17.16 billion radio generated in pre-pandemic 2019. And looking ahead to the next three years, the forecast is for radio revenues to decrease about 3% each year to land at $15.12 billion in 2025.
Back to 2022, MoffettNathaonson has lowered its outlook for total television billings. After an earlier forecast for 6.5% growth, the firm has tempered that to a 4.3% increase to $84.20 billion from $80.75 billion in 2021.
Newspapers remain on track to decline 8.0% to $8.16 billion, and magazines are still on track to tumble 12.0% to $5.8 billion. But the forecasters now see a 6.0% lift to $81.4 billion for outdoor, up from the previous call for 5.0% growth.
While online will capture the largest piece of the ad pie, the MoffettNathanson Ad Tracker says its growth rate will decelerate this year. The earlier forecast for 19.5% online ad growth has now been revised downward to 12.7% growth. That will amount to $188.67 billion, up from $167.34 billion in 2021.
All in, the revised forecast is for $311.53 billion in total U.S. ad revenues, this year. That’s an 8.4% increase over 2021’s $287.32 billion.
Weaker Than Expected TV Advertising
Why the revision? TV broadcast revenues were weaker than expected in the second quarter with total TV down 2% year-over-year. That was triggered by a 9% decline at the broadcast networks, which was tempered somewhat by a 6% gain at local TV stations and a 1% gain at cable TV. More significantly, online ad growth was cut in half, falling to single-digit growth (+ 9.5%) from +18.9% in the first quarter.
According to the MoffettNathanson Ad Tracker, radio revenues grew by double digits in second quarter 2022 to $1.70 billion from $1.50 billion, an increase of 13.0%. Only outdoor (+28.9%) and addressable video on demand (+26.8%) posted larger year-over-year gains.
What’s driving the overall ad slowdown? While the leading online advertising companies are blaming the macroeconomic environment, MoffettNathanson analysts see other factors at play. “We believe the slowdown on digital ad growth reflects the movement of budgets to emerging ad platforms like TikTok and Apple, in addition to broader concerns,” the company says in its updated forecast. In addition, it sees an ongoing shift in consumer spending from goods to services which will be a “continued headwind” for digital ad growth moving ahead.
The MoffettNathanson Ad Tracker analyzes quarterly U.S. advertising trends using publicly-reported, quarterly financial results. Its database tracks reported advertising revenue for 43 U.S.-listed, large-cap, advertising-supported media companies that had around $240 billion in ad revenue in 2021, or around 83% of the total U.S. measured-media ad market. In addition to tracking advertising on a company level, the tracker also covers advertising by major advertising media: television (local TV stations, broadcast networks, cable networks and cable MSOs), newspapers, consumer magazines, radio, outdoor and online.