Forecast 2023: Ad Spending Will Slow Down Next Year But Will … – Forbes

Forecast 2023: Ad Spending Will Slow Down Next Year But Will … – Forbes

Despite some concerns about the economy and the lack cyclical events, prognosticators are … [+] forecasting ad spending to increase in 2023. With strong growth from retail media and connected TV. (Illustration by GraphicaArtis/Getty Images)

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Several ad agencies and companies have recently released their annual ad spending forecasts for 2022 along with future prognostications. Despite concerns about the economy and the thousands of recent layoffs from media and tech companies, ad spending is expected to increase in 2023 in the U.S. and globally, although not to the extent of the recent post-pandemic years of 2021 and 2022.

Also impacting next year’s ad spending forecasts will be the lack of cyclical events such as The Olympics, FIFA Men’s World Cup and U.S. midterm elections. Among the advertising channels expected to have robust growth are retail media and ad supported streaming video. Ad spending growth for social media will be modest with Apple’sAAPL
new privacy features making it more difficult to track behavior. The ad spending for traditional media, with the exception of out-of-home, will be flat at best.

Magna Global, notes the U.S. ad economy was sluggish for most of 2022 which should continue into 2023. For 2022 Magna estimates U.S ad market to total $318 billion, surpassing $300 billion for the first time, a year-over-year increase of 8%. Ad spending was stronger in the first half of the year (+11%) compared to the second half (+6%).

Helping to drive the overall increase in ad dollars were such cyclical events as the Beijing Winter Olympics, Men’s World Cup from Qatar and record high ad spending for the midterm election with a whopping +66% compared to 2018 midterms. When these events are excluded ad spending grew by 6.2%.

For 2023, Magna anticipates U.S. total ad spend to grow by 3.7%, lower than the +4.8% from its September forecast. When cyclical ad dollars are eliminated for both years, ad growth for 2023 is forecast to be +5.8%, comparable to the non-cyclical growth of 2022. Magna expects the U.S. economy to remain sluggish early in 2023 before picking up as inflation drops and unemployment remains low.

The ad agency projects in 2023, an off-year politically, long form video advertising will drop year-over-year by -8% although ad dollars for AVOD will remain strong at +32% along with short-form video +10%. Out-of-home media will be at +7% in 2023 while audio will be flat. For digital media search will continue to be robust at +11% while social media growth will be a more modest +5%, post Apple’s iOS-14.

The ad spending for product categories in 2023 will vary. Magna forecasts ad spend growth for media/entertainment, travel and betting will be the strongest. The ad spending for automotive should also increase as supply chain issues improve. On the other hand, ad spending of CPG and finance will be flat or down.

Globally, in 2023 Magna projects ad spending revenue for media owners to total $833 billion, a year-over-year increase of 5% from $795 billion. The revised forecast is 1.5% lower than Magna’s June projection. Magna cites a deteriorating macroeconomic outlook for lowering its projection. The 5% year-over-year increase in 2023 is lower than +7% registered in 2022 and +23% from 2021.

Looking at regions, Magna forecasts in 2023 …….


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