Key findings from MAGNA’s U.S. Advertising Forecast Update:
- In the wake of a historically strong 2021, U.S. media owner’s advertising revenues grew by +11% to $151 billion in the first half of 2022, based on financial reports.
- Media channel performance varied greatly in the first half with strong revenue growth in out-of-home (+30%), and robust growth in keyword formats (search, retail media) (+19%), contrasted against stagnation in social media (+3%).
- The weaker economic environment will cause several industry verticals to reduce ad spend in the second half, but stronger-than-expected political spending will mitigate the impact on revenues of media owners.
- Full-year media owner revenues will thus cross the $300bn market for the first time, to reach $323bn. That’s +9.8% above 2021 levels (+8.1% if we only consider non-cyclical ad spend and exclude political dollars).
- For 2023, the continued economic slowdown and the lack of major cyclical events led MAGNA to reduce its growth forecast to +4.8% from +5.8% in the previous report.
- MAGNA expects Entertainment (Movies, Streaming), Travel and Betting to grow advertising spending next year, possibly joined by Automotive as the car market finally stabilizes.
- Keyword search formats (+13%) and OOH (+8%) will continue to outperform, while long-form AVOD spending will be driven by the addition of ad-supported tiers from Disney+ and Netflix (+33%).
Vincent Létang, EVP, Global Market Intelligence at MAGNA and author of the report, said:
“Following a strong first half, non-cyclical advertising spending is slowing down as several industries are facing an uncertain economic environment. There are several growth factors that will help stabilize media owner ad revenues in coming months, however. In the short-term (2H22) cyclical factors: Billions of ad dollars will be spent by political campaigns in TV, direct mail, and digital media. In the mid-term (2023) there will be multiple organic growth factors, driven by marketing technology innovation: Retail media networks bringing below-the-line marketing budgets into digital media, programmatic spending in digital audio and digital OOH formats, and the expansion of AVOD and CTV advertising with new ad-supported tiers from Disney+ and Netflix.”