Global advertising growth in 2022 will come in at 9.2%, down from the 12% previously forecast, media investment and intelligence firm Magna said on Tuesday, citing an economic slowdown and restrictions on the data-driven digital ad targeting.
Globally, advertising revenue for media owners will reach nearly $828 billion, about 32% higher than 2019’s pre-COVID level, the company pointed out.
“Magna still expected the global advertising market to slow significantly in 2022 following the unprecedented levels of growth seen in 2021 (global +23%, US +26%) driven by a ‘planetary alignment’ once in a lifetime of factors: the V-shaped economic recovery and the marketing implications of post-COVID lifestyles,” the company said. “The reduction in our forecast…is due to two main headwinds: a global economic slowdown since the second quarter (full-year real GDP growth of 3.6%, according to the IMF, compared to 4.9% six months ago) and the increasing restrictions on data – targeting focused on digital advertising sales (for example example, the impact of Apple iOS changes on display and social ad formats).
Apple’s new policy prohibits the collection and sharing of certain data unless users opt in to tracking on iOS 14.5 or later devices via a prompt. This affects ad personalization and performance reporting.
Magna noted that growth forecasts of more than 9% for the current year “will remain above pre-COVID growth rates”, which averaged 7% over the 2015-2019 period. But he also pointed out, “The economic downturn will really start to affect advertising markets in the second and third quarters, and Magna expects weaker growth in the second through fourth quarter period, as well as throughout 2023. “
The company also said its downward revision to full-year 2022 guidance “would have been much more pronounced had it not been for a stronger than expected first quarter recorded in most markets (+14% in the US).” And he added: “Growth expectations would also be lower without the strong cyclical factors of 2022: the US midterm elections (bringing in nearly $7 billion to local TV stations and digital media) and two events world sports: the Winter Olympics in Beijing. and FIFA World Cup (Qatar, November).
Without cyclical ad dollars, TV revenue growth in 2022 would be less than 2% instead of 4% this year, according to Magna.
“Most of the headwinds facing the advertising market this year were expected,” said Vincent Létang, executive vice president, global market research at Magna and author of the advertising report. “Most of the headwinds facing the advertising market this year were expected: an economic downturn after a scorching 2021, persistent supply issues driving inflation, and growing privacy restrictions slowing the growth of digital ad formats. On top of that, the war in Ukraine is now exacerbating inflation and economic uncertainty.
He concluded: “Nevertheless, Magna expects full-year advertising revenue to grow again in 2022 at a healthy pace, helped by a strong start to the year, in addition to organic and cyclical drivers.” Among the organic growth drivers, the company cited “continued and widespread e-commerce spending and the adoption of digital marketing.”
Létang also pointed out that organic and cyclical drivers and “strength in emerging or recovering verticals,” such as travel, entertainment, betting and technology, “will generate enough marketing demand to offset headwinds and sustain the growth of the ad economy in 2022.”