Global advertising growth in 2022 will reach 9.2 percent, or $816 billion—lower than the previously forecast 12 percent, revealed Magna, citing an economic slowdown and growing restrictions to data-driven targeting of digital ads.
“Magna was always expecting the global advertising market to slow down significantly in 2022 following the unprecedented levels of growth observed in 2021 (global +23 percent, US +26 percent) caused by a once-in-a-lifetime “planetary alignment” of factors: the V-shaped economic recovery and the marketing consequences of post-COVID lifestyles,” said the firm’s June 2022 forecast.
Nevertheless, a 9 percent increase this year would remain above pre-COVID growth rates—the average increase between 2015 and 2019 was 7 percent.
Magna anticipates North America to grow the most at 11 percent to a new high of $326 billion—40 percent of the global advertising market. This growth is marginally less than Magna’s prior forecasts for this year of 12.6 percent in March and 11.5 percent in December. Magna decreased its growth forecasts for Q2 to Q4 2022 as a result of the economic slowdown, though this has been somewhat offset by the market’s unexpectedly strong performance in Q1 where it grew by 14 percent and by the greater forecast for political spending of 51 percent.
Cross-platform video advertising will grow by 8 percent to reach $89 billion while national linear TV’s decrease of 4 percent will be offset by the growth of long-form advertising-based video on demand (22 percent) and short-form pure players (19 percent) in addition to local TV’s record political spend. At the same time, cross-platform audio advertising—including broadcast radio, audio streaming and podcasting—will rise by 5.7 percent to $16.8 billion as cross-platform publishing ad sales fall by 3 percent to $16.2 billion.
One year ahead of previous expectations, out-of-home sales will grow beyond its 2019 pre-COVID high to $8.5 billion. Direct mail will also benefit from political campaigns and revenues will increase by 2.6 percent to reach $17.6 billion.
Following the decrease from Q3 2021 (44 percent year-over-year) to Q4 2021 (19 percent), pure play digital media advertising sales—i.e., search and social media—increased by 16 percent YOY to $42.5 billion in Q1 2022. Social media sales, on the other hand, curbed to an 8 percent increase in Q1 compared to its 38 percent growth in 2021—due primarily to Apple’s updated privacy restrictions.
Search advertising remained high in the quarter at 24 percent as interest from advertisers shifts from social media to search in light of Apple’s changes. Still, in 2022, pure play digital advertising sales will grow by 14 percent to $195 billion. Search will lead performance at 18 percent to reach $116.7 billion.
Social media will grow to $67 billion at an 11 percent increase—a downgrade from Magna’s previously forecast 18 percent. Magna cites client saturation, audience saturation and targeting restrictions but the 2022 acceleration is to be expected after social media advertising experienced a 36 percent increase in 2021.
Most industry verticals are expected to stabilize or increase ad spend this year, according to Magna. Travel, entertainment, betting and technology are expected to grow the most while automotive, consumer packaged goods (CPG) and fast-moving consumer goods (FMCG) budgets may be under pressure due to supply chain and cost issues.
The economic slowdown will start affecting ad markets in Q2 and Q3 and Magna forecasts lower growth over the Q2 to Q4 2022 period, as well as throughout 2023.