Six passes left to attend the Digiday Publishing Summit
Magna 2023 forecast paints a resilient U.S. market, thanks to retail media and streaming
In its latest 2023 advertising forecast, IPG’s Magna unit is expecting a resilient U.S. market this year — boosted by retail, streaming and the auto industry’s bounceback.
This year’s outlook comes with “mixed economic signals,” but organic growth in those areas will mitigate some of the economic uncertainty, the report noted. Despite the fact that ad spending slowed down significantly in the second half of 2022, U.S. media owner revenue grew by 6% in 2022, totaling $315 billion.
As Jay Langan, CEO of Ocean Media, previously told Digiday, agencies expect clients to pull back during uncertain times. He said the brands that come out stronger have been focused on scenario planning for different budgets and optimizing their media mix based on performance and data.
“You want to be ready to ramp quickly when the economy picks up, and this can vary across different categories,” Langan previously said.
Overall, Magna is expecting all media ad revenue to increase by 3.4% this year — slightly lower than the 3.7% in previous forecasts — as the market reaches a record $326 billion. Non-cyclical ad spend, excluding political events and Olympics, will grow by 5.2% this year. With no cyclical events in 2023, elections or major international sports events, about $7 billion of ad spend is excluded compared to some even-numbered years.
“Every year is a record year,” said Vincent Létang, evp of global market research at Magna. “The U.S. advertising market keeps growing. We think it will keep growing this year, despite all the concerns about the economy.”
Retail media networks and the growth of ad-supported video streaming are among the organic growth factors contributing to a more resilient market. The auto industry is also experiencing a comeback, with car sales growing again and media owners seeing a rebound in ad spend from that category in the fourth quarter.
“We believe that [those] are some organic drivers… that keep marketing and advertising growing, even during temporary economic slowdowns,” Létang said.
In terms of RMNs, below-the-line marketing budgets into digital media is boosting its growth this year. With e-commerce rising in many CPG areas, there will be more budget reallocation from in-store marketing into RMNs. Magna forecasts retail media ad revenue will grow 15% to reach $41 billion in 2023, and search and e-commerce ad formats will increase by 10%, remaining the largest ad format totaling $125 billion in 2023.
Ad-supported long-form video streaming is expanding thanks to ad-supported tiers on Disney+ and Netflix. These are becoming more accessible and affordable options for brands compared to linear television, which becomes more expensive on a per-eyeball basis. The cross-platform national long-form video advertising, including linear TV networks, AVOD and FAST channels, will stabilize at $43.8 billion. The organic growth of streaming with AVOD and FAST channels will increase 20%, offsetting the organic decline and weaker pricing of linear ad sales that will decline by 5%.
Additionally, travel and entertainment are expected to see some growth in spending, while consumer packaged goods, restaurants and retail brands will face challenges. And in types of formats, digital advertising will continue to grow at 9%, with more organic adoption, while linear ad formats will become more vulnerable to the uncertain economic environment — facing a decline of 4%.
The next Magna ad forecast will be published in June 2023.
More in Media
Betches brings its viral voice to a new style destination for millennials and Gen Z
Betches Media yesterday introduced Betches Style, intended to offer style guidance to its largely Gen-Z and millennial women audience.
Roblox’s growth comes with growing pains between creators and ad sales
On September 5 and 6, roughly 2,000 Roblox creators and marketers traveled to San Jose for the platform’s annual creator conference. This year’s RDC came during a particularly busy period for Roblox, which is rapidly expanding its advertising business — announcing a partnership with Google to expand its programmatic ad business in April — while simultaneously facing a wave of lawsuits claiming the platform is not properly protecting its underage users.
How The New York Times is betting on a new family plan to grow its digital subscriber base and revenue
The New York Times’ new family plan is key to its overall subscription strategy to boost acquisition, retention and revenue.