Ad spend will grow next year, though slower than initially expected

Advertising agencies are trimming more than their Christmas trees this holiday season.

This week, both Magna and GroupM released their ad spend forecasts for 2022 and 2023, each updating earlier expectations released in June.

• Magna predicts that global advertising revenue will grow to $833 billion in 2023, or about 5% year over year. It trimmed 1.5 percentage points from an earlier prediction in June due to “the deteriorating macroeconomic outlook,” the report said.
• GroupM shed a similar amount from its 2023 outlook, dropping its projection from 6.4% to 5.9% growth, or $856 billion (excluding US political advertising).
• In the near term, GroupM’s global ad spend expectations for 2022, excluding political ad spend in the US, have been cut from 8.4% to 6.5%, or about $808 billion. Magna anticipates revenue of about $795 billion.

“Pure-play” digital advertising will finally fall back down to earth, only growing 9.3% in 2022, down from its June  prediction of 11.5%, GroupM said, accounting for 67% of the total industry spend. That’s about $541 billion. (For reference, last year it grew by 31.9%.)

Meanwhile, television advertising will only grow by 1.7%, according to GroupM. Each agency cited growth in CTV and retail media as reasons for optimism. In fact, GroupM estimates that retail media will grow to $111 billion in 2022, up from $98 billion last year, or 13%. CTV is predicted to grow 17% to $20 billion this year.

Another bright spot? Out-of-home media has officially “recovered its pre-Covid size” in several markets, including the US, and should reach “a full global recovery by 2023,” growing to $33.5 billion, according to Magna.

Political bonus: Spending during the midterms increased by an estimated 90% over the 2018 midterms, totalling $12.6 billion, only $500 million away from 2020’s presidential election total, GroupM said.

What’s next? GroupM encouraged “cautious optimism” despite economic concerns, noting that “large declines appear limited to select channels in select markets,” specifically in some European countries, which are facing “steep energy cost increases and shortages” tied to the war in Ukraine. Meanwhile, Magna said we’re in a moment of “profound uncertainty in the global economy, due to well-known economic and geopolitical factors.” Cool.