Global advertising growth in 2022 will come in at 9.2 percent, lower than the previously forecast 12 percent, media investment and intelligence company Magna said on Tuesday, citing an economic slowdown and restrictions to data-driven targeting of digital ads.
Globally, media owners’ advertising revenues will grow to nearly $828 billion, about 32 percent above the pre-COVID level of 2019, the company highlighted.
“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, U.S. +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,” the company said. “The reduction of our forecast … is due to two main headwinds: a global economic slowdown since the second quarter (full-year real GDP growth 3.6 percent, according to IMF, compared to 4.9 percent six months ago) and the mounting restrictions to data-driven targeting affecting digital advertising sales (e.g. the impact Apple iOS changes have had on display and social ad formats).”
Apple’s new policy prohibits certain data collection and sharing unless people opt into tracking on iOS 14.5 or later devices via a prompt. That affects ad personalization and performance reporting.
Magna noted that the 9 percent-plus growth forecast for the current year “would remain above pre-COVID growth rates,” which had a 2015-2019 average of 7 percent. But it also highlighted: “The economic slowdown will really start to affect ad markets in the second quarter and third quarter, and Magna anticipates lower growth over the period second to fourth quarter, as well as throughout 2023.”
The firm also said that its full-year 2022 forecast downgrade “would have been much steeper if not for a stronger-than-expected first quarter recorded in most markets (+14 percent in the U.S.).” And it added: “Growth expectations would also be lower if not for the strong cyclical factors of 2022: the U.S. mid-term election (bringing almost $7 billion to local TV stations and digital media) and two global sports events: the Beijing Winter Olympics and FIFA World Cup (Qatar, November).”
Without cyclical ad dollars, 2022 TV revenue growth would come in below 2 percent instead of 4 percent this year, according to Magna.
“Most of the headwinds facing the advertising market this year were expected,” Vincent Létang, executive vp, global market research at Magna and author of the ad report, said. “Most of the headwinds facing the advertising market this year were expected: economic landing following a red-hot 2021, continued supply issues generating inflation, and mounting privacy restrictions slowing down the growth of digital ad formats. On top of that, the war In Ukraine now exacerbates inflation and economic uncertainty.”
He concluded: “Nevertheless, Magna believes full-year advertising revenues will grow again in 2022 at a healthy rate, helped by a strong start to the year, on top of organic and cyclical drivers.” Among the organic growth factors, the company cited “continued and broad-based e-commerce spending and digital marketing adoption.”
Létang also highlighted that organic and cyclical drivers and “the strength of emerging or recovering industry verticals,” such as travel, entertainment, betting and technology, will “generate enough marketing demand to offset headwinds and keep the advertising economy growing in full-year 2022.”