The global ad market will continue to grow in 2023, though traditional media formats have seen better days.
Just ahead of Cannes Lions, Magna is releasing the summer update to its Global Ad Forecast, showing advertising revenues will reach $842 billion, a 4.6% growth over 2022 ($805 billion). According to Magna, though Western markets are facing a down economy, stronger-than-expected growth in markets such as China and Spain, as well as verticals such as retail and social, are mitigating losses.
Overall, Magna’s forecast is 0.2 percentage points lower than its previous December 2022 prediction of 4.8% growth.
“Advertising spending slowed down to a halt in the first quarter of 2023 (+1.5% globally, flat in most Western markets) due to economic uncertainty and the lack of cyclical drivers,” Vincent Létang, evp of global market research at Magna, and author of the report, said in a statement. “There are, however, some drivers mitigating the impact of economic slowdown: ecommerce and Retail Media bringing more marketing dollars into digital advertising formats, and the counter-cyclical dynamic of some large industry verticals (Retail, Auto, Travel).”
Though Létang and Magna expect the global marketplace to keep growing this year, traditional media formats and mature markets will struggle. However, Létang added that traditional media owners are developing cross-platform capabilities and brand-safe addressable solutions that are increasingly attractive to brands, accounting for 19% of their advertising revenues.
TV is among the industries facing an uphill battle.
The report notes that editorial media companies and branding formats (television, audio, publishing, OOH, cinema) are vulnerable in economic downturns and uncertain business climates when brands are tempted to reduce marketing budgets or prioritize performance-based digital ad formats over high-funnel branding channels. Thus, the advertising revenues of traditional media owners will shrink by 3% this year to $264 billion, which comprises 31% of total ad sales.
Overall, television advertising revenues (cross-platform long-form video ad sales) will shrink by 5% this year to $159 billion, according to Magna. The continued migration away from linear is also hitting TV broadcasters hard in live linear viewing and rating supply (averaging a 10% drop in 2022), a slowdown in pricing conditions and a lack of cyclical events following the record cyclical spending of 2022 with events such as the FIFA World Cup.
According to Magna, the “lack of a major cyclical sports event in 2023” will also slow the growth of various industries, such as betting. (However, Fox Sports recently noted to Adweek that ad buys for the Women’s World Cup were up by 50% over 2019.)