What a difference a year can make. That’s MoffettNathanson’s take on advertising trends in 2022 and in 2023. After drilling down into third quarter results, the firm has lowered its 2022 U.S. advertising revenue forecast to 7.8% year-over-year growth to $309.6 billion, down from the 8.4% bump it predicted at the start of 2022.
TV (including addressable video on demand or AVOD) takes one of the biggest haircuts, tumbling from 4.3% growth to a 3.1% year-over-year increase in the revised forecast. That’s due to lower anticipated growth at cable networks and at AVOD, which are only partially offset by faster growth at local TV stations, thanks to a boost from political dollars. The new forecast gives a kiss for outdoor, now estimated to have grown 10% year-over-year to $8.5 billion in 2022 while the online advertising estimate is lowered to 12% growth vs. +12.8% at the start of 2022.
Even as it became the latest forecaster to lower its 2022 U.S. advertising revenue estimate, MoffettNathanson is keeping its radio figure for 2022 unchanged. U.S. radio revenues are estimated to grow 3% from $16.1 billion in 2021 to $16.6 billion in 2022. That’s the same year-over-year percentage increase they originally called for back in late January 2022. Radio’s third quarter revenues grew 2.7% year-over-year from $1,605,000 in Q3 2021 to $1,648,000 in the updated year-end forecast. That made Q3 responsible for 3.3 % of radio’s full year growth.
The slower than expected growth trend continues into 2023. According to the MoffettNathanson ad tracker, total 2023 U.S. advertising revenue is on track to increase by 6.6%, compared to 7.9% previously. Its TV advertising growth forecast (including AVOD) falls to -3.3% compared to -1.0% previously, driven by lower anticipated growth at cable networks and for broadcast TV Networks.
“We continue to believe that AVOD will remain a growth category in the U.S. advertising market as engagement shifts from linear TV to ad-supported streaming services, albeit at a slower growth rate on a core basis,” the revised forecast says. After updating its AVOD estimates to include Netflix and Disney+ advertising, the firm now projects the U.S. AVOD market will grow at a +24% compound annual growth rate from 2021 to 2025, reaching $18 billion vs $9.6 billion in 2023.
Its online advertising revenue growth estimate also declines +13.1% (vs. +14.3% previously) as it says some of the current weakness in the market will carry over into 2023. “Despite the slower growth in online advertising, we expect it will continue to take share of the U.S. advertising market, rising from 61% share in 2022E to 69% in 2025E,” MoffettNathanson says.
Radio will essentially give up 2022’s revenue increase in 2023 when its ad dollars decline 3% to $16.1 billion in 2023, the forecast says. At this juncture the firm is calling for a compound annual growth decline of 2.1% from 2019 to 2025 for radio.
The MoffettNathanson Ad Tracker is based on quarterly U.S. advertising trends using publicly-reported, quarterly financial results. Its database tracks reported advertising revenue for 37 U.S.-listed, large-cap, advertising-supported media companies which accounted for roughly 83% of the total U.S. measured-media advertising market in 2021.