Traditional media resilient through economic uncertainty, social media stalls, report
The winter update of MAGNA’s Global Ad Forecast predicts media owners advertising revenues will reach $833 billion in 2023, a five per cent growth vs. 2022 ($795bn), slowing from +7% in 2022. This new 2023 growth forecast is 1.5 percentage points below MAGNA’s previous forecast (June 2022) due to the deteriorating macroeconomic outlook.
After a strong start in 2022, advertising spending growth slowed significantly in the second half amidst global economic uncertainty.
Nevertheless, full-year 2022 ad revenues still grew by almost +7% to $795 billion, helped by record levels of cyclical spending (elections in Brazil and the US, Winter Olympics, FIFA World Cup).
Traditional media companies (Television, Audio, Publishing, OOH) saw their advertising revenues grow by +2.5% this year, despite the challenging economic environment, while digital media companies grew by +9%. This the narrowest growth gap ever observed by MAGNA, signaling that editorial media brands remain attractive and relevant as they now combine brand-safety with cross-platform reach.
Vincent Létang, EVP, Global Market Research, MAGNA and author of the report: “Advertising spending slowed down in the second half of 2022 because of economic uncertainty and issues affecting digital advertising formats, but traditional editorial media managed to grow by +2.5%. The gap in growth rates with digital advertising growth (+8.9%) was the narrowest ever measured by MAGNA, suggesting that the long-term transition to a digital-centric marketing landscape has slowed down following the COVID acceleration. Marketers continue to value the brand safety that editorial media vendors deliver, combined with expanding cross-platform opportunities. Television (+2%) and OOH media (+12%) were particularly resilient in 2022. The introduction of ad-supported premium streaming in 2023 and the continued success of digital audio formats also exemplify the comeback of ad-supported editorial media in the top of mind of marketers, consumers, and media executives.”
MAGNA looks ahead to the new year at a moment of profound uncertainty in the global economy, due to well-known economic and geopolitical factors, and consequently diminished visibility to the short-term trajectory of global media markets. MAGNA nonetheless maintains its usual calendar with this release, and draws confidence in our forward view as we leverage our decades of institutional forecast experience.
Globally, MAGNA expects media owners’ advertising revenues will grow by +5% in 2023 to reach approx. $830 billion. This is a slowdown from +7% in 2022 and +23% in 2021. The new 2023 growth forecast is 1.5 percentage point below MAGNA’s previous global forecast (published in June 2022) due to a deteriorating macroeconomic outlook. MAGNA’s June forecast was based on a global economic growth expected at the time to reach +3.6% in 2023 (real GDP forecast from IMF WEO April 2022) but that expectation was since cut down to +2.7% in the latest IMF update (WEO October 2022).
Around the global average growth +5% in 2023, MAGNA anticipates few variations as every region is confronted to the same economic challenges. North America and Western Europe will growth below average, growing by +3% to +4%, while APAC (+6%) and Latin America (+9%) will grow slightly faster than average. Among the 15 largest advertising markets, the strongest growth will come from India in 2023 (+14%) followed by South Korea (+7%). At the other end of the spectrum, MAGNA expects very little growth (under +3% all-media, negative for traditional media) in Germany, Italy, Japan, and Spain. France and the UK will find themselves close to the global average, with advertising sales growing +5% to +6% next year.
Television continues to suffer from the long-term erosion of linear reach and live viewing (time spent and ratings decreases between -5% to -15% per year depending on targets and markets), still not fully offset by rising audiences and ad sales on non-traditional platforms or formats. Cross-platform television ad revenues grew by +1.7% in 2022 to $172 billion but will decrease by -4% in 2023.
Keyword-based search advertising formats (including product search by ecommerce platforms) remain the largest advertising format with consumer brands and small businesses spending $260bn in 2022 globally. While the growth of other digital ad formats slows due to data restrictions, Search is driven by the continuing growth in ecommerce and Retail Media Networks and was the fastest-growing ad format in 2022 (+13%).
Growth was fueled by volume rather than pricing: search queries increased by +3% and click-through-rates (% of search results leading to sponsored link clicks) increased by +9% probably because an increasing proportion of searches are product or shopping searches. The same organic growth factors will generate an additional +10% in global Search spend in 2023.
