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Podcasting And Streaming Lifts Magna’s Audio Ad Outlook.

Podcasting and streaming services will push audio advertising higher in 2022 according to the latest ad forecast released by the ad agency Magna. It does, however, track a slower rate of growth during the second half of the year as political ad buys will help offset what is an otherwise softer ad market.

“Cross-platform audio ad sales will increase as digital audio streaming and podcasting ad sales will offset the slowdown in linear radio,” says Vincent Létang, Magna’s Executive VP of Global Market Intelligence. He says Magna sees total audio ad revenue growing 6.9% to about $17 billion this year after a stronger 10.3% growth rate recorded during the first half.

The past two years brought relatively easy year-to-year comparisons, along with sizable growth rate numbers. Those will be tougher to achieve in 2023 according to Létang. He says audio ad growth will basically “stagnate” albeit with a growth outlook of 0.8% versus the current year. “The continued growth in digital format sales will barely offset the erosion of linear ad sales,” Létang says.

Overall, Magna has cut its outlook for total U.S. ad growth this year. It now expects the ad market to expand 9.8% versus an 11.1% forecast it released in June.

“After analyzing Q1 and Q2 earnings from media companies, we now know that advertising revenues were, in fact, even stronger than we estimated back in our previous report in June,” said Létang. But he said that since then the economic climate has had a “lagging effect” on ad spending. “In the current environment, some industry verticals are struggling and might be forced to reduce marketing spending,” Létang says. Magna expects consumer brands like food, drinks, personal care, household products, to show little or no growth this year. Létang says that is also likely the case for entertainment, travel, and automotive ad spending. “In the case of automotive, we're confident that we've reached the point where auto sales may start to grow again in 23. And with them, automakers and car dealers will resume marketing and advertising,” he says.

The impact of political advertising and cyclical events like the World Cup will help in 2022, but without those events or an Olympics in 2023, Magna foresees slower growth in the year to come. It is now forecasting the total ad market will grow 4.8% next year compared to its June prediction of 5.8%.

“In the mid-term there will be multiple organic growth factors, driven by marketing technology innovation,” Létang says, including on that list more programmatic spending in digital audio.

Magna is also joining the list of prognosticators that is forecasting a robust political advertising season. Based on unprecedently large fund-raising year-to-date, Magna expects political advertising spending to grow by +63% over the previous mid-term cycle in 2018 and generate $7.3 billion in incremental advertising revenue for media owners, with 70% of it concentrated in the second half. Local television will attract almost two-thirds of that total, as political ad sales will account for a quarter of total.

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