Dive Brief:

• Advertising revenue for media owners is projected to hit $833 billion in 2023, up 5% from 2022’s $795 billion, according to research shared with Marketing Dive by Magna.
• The expected growth rate next year is 1.5 percentage points lower compared to Magna’s June forecast, a downturn the company attributes to a deteriorating macroeconomic environment.
• The 5% growth rate is also down from the 7% increase global ad revenue experienced in 2022. Spending slowed significantly in the second half of the this year. However, full-year advertising sales grew, mainly through the help of big-ticket events such as elections in the U.S. and Brazil and sporting events such as the FIFA World Cup.

Dive Insight:

Manga predicts that 2023 will be a slow year for U.S.-based advertisers, with sales growing just 4% to $330 billion. This is largely due to the lack of cyclical and political ad spending. When this type of spending is excluded, the firm predicts ad spending will grow 6%, with market recovery in the second half of the year.

Following a small uptick in ad revenues in 2022 for traditional media owners, Magna’s predicts that ad sales for publishing and television will shrink by 3% and 4% respectively in 2023. However, digital advertising sales are expected to grow by 8%, reaching $557 billion in global sales and reflecting 65% of ad sales. The driving factors behind digital ads sales will be e-commerce and ongoing shifts in media consumption habits, with digital video expected to be the fastest-growing ad format. A recovery in social media could see ad sales increase 7% in the segment while search is expected to gain 10%.

While this year’s market struggles have been well documented, the report reminds advertisers that things weren’t all bad. Out-of-home (OOH) marketing reached pre-pandemic levels in the U.S. and Germany and is expected to make a full global recovery in 2023, reaching $33.5 billion. Despite the ongoing erosion of linear television viewing audiences, there are a few bright spots for the channel. Strong growth is expected for ad-supported video on demand and linear addressable. Resilient pricing and sport genres are also expected to cushion the TV sector while rising concerns around brand safety could slow digital investments for some marketers, potentially benefiting TV.

”Marketers continue to value the brand safety that editorial media vendors deliver, combined with expanding cross-platform  opportunities,” Vincent Létang, executive vice president of global market research at Magna and author of the report, said in a statement. 

The picture is less clear for automotive but, Magna expects ad revenues in this sector to make a recovery in 2023. Other sectors might go another way.  Magna predicts the CPG/FMCG verticals and finance to slow marketing investments next year.

Major global markets such as China and India could experience a recovery next year. China, the second largest ad market reflecting 15% of global revenue, is expected to grow 7% to $128 billion following a weak 2022 performance of 3% growth. The slow year was largely driven by China’s zero-Covid policy, which has come under heavy scrutiny.

India, which is also in the top 15 advertising markets globally, is expected to grow 14% next year, with South Korea’s market expected to grow 7%, per the report. However, key markets such as Germany, Italy, Spain and Japan are forecast to have little growth.