Ad growth will slow due to Russia-Ukraine war—Magna forecast

U.S. ad spending will experience lower-than-anticipated gains this year as a result of Russia’s continuing war with Ukraine, according to a new forecast. Magna reports that media owners' advertising revenues will grow by 11.5% this year—a single percentage point below the 12.6% growth the IPG shop had previously forecast for 2022. Revenue is expected to reach $320 billion this year, exceeding the $300 billion mark for the first time, as the earlier forecast anticipated. “Now with Ukraine, economic growth will be slightly lower and how much lower no one can tell, it depends how bad how long this geopolitical crisis will be,” said Vincent Létang, executive VP of global market intelligence at Magna. Read the latest news on industry responses to the Russia-Ukraine war. In the report, he wrote that “the Ukraine crisis has already hit consumer and business confidence,” and noted that such economic repercussions now factor into Magna’s ad forecast. Magna expects spending in categories hit hard by supply chain issues, such as automotive, to suffer while industries such as technology, telecom, entertainment, travel and betting are expected to grow. Yet there are some bright spots that might offset the decline. Political spending ahead of the midterm elections will be one contributing factor, Magna reported, noting it expects incremental advertising revenue from political campaigns to reach $6.2 billion this midterm cycle, a 41% increase versus the 2018 midterm elections. The category is led by gains in local television, direct mail and digital media formats. Channel gains are expected in digital media, which saw huge growth in the last two years, and out-of-home, which is making a comeback following a decline during the early days of the pandemic. Search advertising sales will grow by 17% this year, and social media ad sales will increase 16%, a slower rate than the 27% gain last year. With more employees returning to offices, advertisers are seeing an opportunity for a renewed interest in out-of-home advertising. “Consumers will resume normal mobility and that will help out-of-home to recover by a further 11%,” Létang said. The report also found that cross-platform video will remain strong. Magna also reported its final sales estimates from 2021. The agency found that advertising revenue grew a record 25% to $287 billion, though the pace of such growth slowed slightly in the fourth quarter—revenue was up 14% year-over-year in the quarter after a 26% increase in the third quarter, for example. Magna plans to issue its next quarterly report in June.

Ad growth will slow due to Russia-Ukraine war—Magna forecast

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