IPG Mediabrands’ Magna has again lowered its 2023 global ad growth forecast, mostly due to the continued underperformance from traditional media owners.

For the first time, Magna’s Global Advertising Forecast examined advertising growth per quarter in certain markets. Ad spending “slowed down to a halt” in the first quarter of 2023—actually a tepid rise of 1.5% globally, according to Vincent Létang, head of global market intelligence at the media agency.

Magna now predicts global ad revenue will increase by 4.6% to $842 billion in 2023. The agency had previously predicted 4.8% growth in December and 6.3% growth back in June 2022.

‘Traditional media formats and mature markets will struggle’

In the U.S., advertising revenue is expected to increase only 2.5% to $333 billion in 2023, a decided cut from the 3.4% growth Magna had predicted for the region just three months ago.

For 2024, Magna expects global ad spending to reaccelerate to 6.1% growth, reaching $892 billion, with the return of cyclical events such as the U.S. presidential elections, Summer Olympics and European Football Championship. 

“On balance, Magna expects the global marketplace to keep growing this year, as it managed to do during the brutal COVID recession of 2020,” Létang said in a report presentation. “But of course—like in 2020—traditional media formats and mature markets will struggle this year.”

Magna's growth predictions are optimistic compared to Dentsu's expectations. In May, Dentsu trimmed its 2023 forecast to 3.3% growth from its previous 3.5% growth prediction, which was adjusted to account for hyperinflation in some markets from Dentsu’s December 2022 report, which predicted 3.8% growth.

WPP-owned GroupM was more bullish earlier this month, predicting the international ad industry would grow 5.9%, excluding U.S. political advertising, in 2023. 

Global industry growth is being buoyed by booming digital platforms. Magna expects digital platform ad sales, which include search, commerce, social and digital video, will grow by 8.5% to reach $577 billion in 2023, accounting for 69% of total ad sales. Traditional media owner revenue, which includes television, audio, publishing, out-of-home and cinema, will shrink by 2.9% in 2023, netting $264 billion, Magna predicted.

Social media ad revenue is expected to rebound in 2023 after its worst year of growth on record, when it grew just 6% in 2022. Short-form digital video, including YouTube and Twitch, will grow ad sales by 8.6% to $71 billion this year, according to the Magna forecast. Digital formats such as search, video and banners are expected to slow down in 2023 but social is predicted to grow 9.4% as it overcomes most of its data-related headwinds and new vertical video formats stop impeding overall revenue, Magna reported.

Magna predicts that retail media networks will generate $121 billion in advertising sales this year, up 12% from 2022. While most of these ad sales will come from e-commerce platforms, traditional retailers are developing their own media capabilities, and their advertising sales are forecast to grow 24% to reach $21 billion. 

TV advertising is expected to shrink 5% this year to $159 billion. The only traditional media categories that Magna expects to grow in 2023 are out-of-home, which it reports will finally return to its pre-pandemic size, and cinema, which is expected to jump 23% to $2 billion.

Still, innovation keeps the traditional categories moving, said Létang. “Traditional media owners are developing cross-platform capabilities and brand-safe addressable solutions that are increasingly attractive to brands,” he said. 

Several industry verticals are recovering from economic and supply chain issues. Automotive and travel are benefiting from the continued low unemployment rates and are growing marketing spending by more than 10% in most markets so far in 2023, Magna found.