US ad spending forecasts were lowered slightly.
Geopolitical and war crisis could drive a lower investment of brands.
Ad market will respond to the impact of the Russia-Ukraine war.
As the war between Russia and Ukraine has progressed, estimates of ad spending have slipped slightly across most US industry sectors.
Magna, the global media investment and intelligence firm, says revenue for ad-generating and creative companies is expected to hit $320bn this year, still surpassing the past projection of $300bn.
“The crisis in Ukraine has hit the confidence of consumers and businesses”, reads the report, where Vincent Letang, Executive Vice President of Market Intelligence at Magna, points out that economic forecasts may be less favorable in supply chain categories, such as the automotive industry, while in sectors such as technology, telecommunications , entertainment and travel these figures will grow.
“Now, with the situation in Ukraine, economic growth will be a little lower, and nobody knows how much. That will depend on how long this geopolitical crisis lasts.”says the VP.
Investment in political ads, according to Magna, is one of the positive predictions that hope to improve the industry in the US, as the mid-term elections are approaching. The survey reveals that the expectation in this area is 6.2 billion dollars, which represents an increase of 41 percent, compared to the values reached in the 2018 election. This type of advertising usually brings profits for television and digital media.
According to statistics from Statista and Zenith Media, advertising spending was expected to go to mobile internet, with an increase of approximately US$63.2 billion, from 2021 to 2023; while the investment for newspapers would be reduced by about 3.5 billion dollars.
Change in advertising spending worldwide from 2021 to 2023, by means (in millions of dollars).
New estimate for the industry
Ad sales in the United States were already beginning to post a notable recovery after the Covid-19 pandemic-induced recession, but the latest forecast shows a downward trend as part of the impact generated by the geopolitical crisis between Russia- Ukraine.
And it is that the uncertainty caused by the humanitarian crisis, the war and the volatility in Ukraine, combined with the continued supply problems, a changing stock market and continuous inflation, caused Magna’s final estimates to change its global perspective on the industry. advertising in the United States.
According to the new forecast, although the spending expectation is slightly lowered, in 2022 advertising revenues for media owners are projected to grow by 11.5 percent, to reach 320 billion dollars. For this year, Magna only lowered its growth forecast by one percentage point.
“The Ukraine crisis will slow economic growth in 2022 and fuel the inflationary trend. It is too early to assess the depth and duration of the economic fallout, but Magna believes the US economy is strong enough to overcome this new challenge,” says Vincent Létang, author of the report.
Magna’s estimates for 2021 were close, seeing ad revenue grow alongside the post-pandemic economic recovery, hitting a record 25 percent to hit $287 billion. All media types benefited from the recovery, in particular, 42 search media, 36 percent social media, 24 percent audio, and 12 percent video.
Growth in various sectors
According to Magna, in 2022 technology, telecommunications, entertainment, travel and betting will lead advertising spending in the face of social and economic reactivation after the most critical stage of Covid-19.
“Regarding marketing and advertisingthe macroeconomic headwind will be mitigated by continued organic drivers (innovation, emerging verticals, e-commerce) and stronger-than-expected political fundraising, leading to at least $6 billion in incremental ad spend”, says the American study.
Search channels will increase 17 percent, social networks project 16 percent more investment, outdoor advertising could have an increase of 11 percent, while multiplatform video will have 8 percent more interest.
Predictions for the advertising and marketing industry also reveal that short-form, pure-play video will grow strongly, up 23 percent; while audio ad revenue is up 5 percent, driven by digital audio; and theatrical ad spend will pay off in a big way with people returning to theaters and blockbuster releases like Batman, Spider-Man and Black Panther.
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