Growth in ad spend won’t match last year’s rates, which themselves have been downgraded, according to two recent forecasts, from GroupM and MAGNA. Here’s a look at some of the highlights from the agencies’ projections.
Released in December, MAGNA’s forecast calls for 4.8% growth in global ad spend this year, following a 6.6% increase last year. Both are downward revisions following a June 2022 prediction of 6.3% and 9.2% year-over-year increases, respectively.
Likewise, GroupM’s forecast comes to somewhat similar conclusions. Global ad spending is predicted to grow by 5.9% (excluding US political advertising) this year, following a 6.5% increase in 2022. While GroupM has roughly the same estimate regarding 2022 ad spending growth, it’s more bullish on the outlook this year. (However, if political advertising is included, the growth rate for 2022 is higher – at 7.8% – while for 2023 it’s lower – at 4.6%.)
Within the US, GroupM figures that ad spend grew by 7.1% in 2022, slightly above the global average. MAGNA, for its part, estimates underlying (excluding cyclical) growth of 6.2% for the US market in 2022, which will moderate slightly to a 5.8% increase this year.
Channel Highlights: MAGNA Forecast
- Traditional media companies’ ad revenues grew by 2.5% in 2022, while digital media companies’ revenues increased by 9%. This was the narrowest gap between the 2 groups ever observed by MAGNA.
- MAGNA expects that digital advertising will grow by 8% this year and account for 65% share of total ad sales.
- While out-of-home (OOH) ad spend has already recovered to pre-pandemic levels in the US, that full recovery will happen on a global level this year, per MAGNA.
- Audio ad sales will be relatively flat (+1%) this year after a 4% rise last year, as a climb in digital audio advertising will only slightly offset a decline in broadcast radio ad revenues.
- Newspaper (-3%) and magazine (-4%) ad sales declined last year, and will drop by 3% combined again this year.
- Search was the fastest-growing ad format in 2022 (+13%) and was powered by growth in retail media networks.
- Social media ad revenues climbed by just 4% last year after recording rates in the 20-35% range in the 3 years prior. This channel will recover somewhat this year, but only to a projected 7% increase.
Channel Highlights: GroupM Forecast
- Pure-play digital advertising is estimated to have increased by 9.3% in 2022, following 31.9% growth in 2021.
- Pure-play digital advertising revenues (excluding spending by advertisers on digital extensions of traditional media) will have accounted for two-thirds (67%) of industry revenue in 2022, and will rise to 73% of revenues by 2027.
- Amid the downgrades, retail media has been upgraded to a $110.7 billion estimate for 2022 spending, up from a September forecast of $101 billion.
- Google and Meta are estimated to have captured almost half (47.2%) of all ad revenues in 2022 outside of China.
- Out-of-home (OOH) ad spend will have grown by 2.2% globally in 2022, or by 18.1% excluding China, where growth is forecast to return in 2024.
- Audio ad spend is expected to grow by 1.3% this year following a 3.8% rise last year. Digital audio now represents about one-quarter of total audio ad revenues.
- Print-based media is forecast to decline by 3.7% this year when including digital extensions, which are expected to make up close to half of total revenues in 2022 and more than three-quarters by 2026.
- Print revenue will drop to near-parity with OOH globally in 2027.
