Despite Market Uncertainties; Magna Forecasts U.S. Ad Market To Reach $320 Billion In 2022

With economic uncertainty driven by inflation and Russia’s invasion of Ukraine creating a geopolitical crisis, ad agency Magna has adjusted their ad spend forecast in the U.S. downward for 2022 by one percentage point, from a previous forecast issued late last year. Despite the revised ad revenue projection, Magna still expects another strong year for the U.S. ad market in 2022. For the year, ad dollars will reach $320 billion, surpassing the $300 billion threshold for the first time.

Magna also finalized their domestic ad spend totals for 2021 at $287 billion, reporting a record year-over-year increase of 25%. With growth ad revenue slowing from +46% in second quarter 2021 to +14% in fourth quarter 2021. Magna noted strong double-digit increases in 2021, including search (+42%), social (+36%), audio (+24%) and video (+12%).

Helping to drive ad volume in 2022 will be the November midterm elections. Citing the Federal Elections Commission (FEC), Magna noted that as of February political contributions were already at $5.7 billion, an increase of 72% from February 2018, the most recent midterm election cycle. As a result, Magna expects political campaign ad dollars to reach $6.2 billion for the year, +41% from 2018 and an upward revision from last December’s projection by +31%. Once again, local broadcast TV is expected to receive a lion’s share of political ad dollars at $4.2 billion, an increase of 26% from the previous midterm election. Moreover, digital media platforms are expected to approach $1.5 billion with direct mail at $600 million.

Magna expects numerous statewide ballot measures to also boost media ad coffers. There are over 75 statewide covering a wide variety of industry issues such as marijuana and legalized wagering to name a few.

(In total, all 435 House of Representatives seats are up for election as well. In addition, 36 statewide gubernatorial elections and 35 statewide U.S. Senate elections. As in previous elections, there will be some competitive primaries and down ballot elections.)

In their ad spend analysis, Magna points out the ad spend for such other product categories such as technology, entertainment, travel and betting will exceed overall market averages. Conversely, ad spend forecasts for automotive will still be struggling with supply chain issues resulting in below overall market growth.

For their 2022 projections, Magna forecasts ad spend for search to grow 17% and social media ad dollars (including political) to increase 16%. The ad dollars for both “lower funnel” media are expected to be below last year’s growth of 42% for search and 36% for social. Magna cites two reasons for the slower growth in 2022, volume saturation (i.e., reach, consumption, etc.) and the erosion of pricing power and consumer attractiveness as millions of social media users on Apple phones have recently opted out of targeted messages. Magna also expects strong ad growth for short-form video at +23$% from 2021, driven by continued viewer growth and political advertising.

Local broadcast TV will benefit from political ads and are projected to have an increase of 16%. Conversely, total national TV is forecast to be -1% from the prior year. Traditional TV ad dollars are expected to fall by 5%, with revenue increase for AVOD/CTV/OTT digital platforms at +27% and cross-platform video at +8%. Year-over-year the ad dollars for total audio is expected to grow by 5%, with linear audio flat and digital audio (streaming, podcasts, etc.) at +15%. Magna points out revenue growth for both video and audio will be hampered by the drop in ad spend from auto dealerships.

Out-of-home media is expected to increase by 11% for the year exceeding $8 billion for the year. Transit ads are expected to see a year-over-year spike of 29% for the year. With movie attendance picking up in the second half of 2021, the ad projections for cinema in 2022 are projected to increase 168%. Nonetheless cinema ads will garner an expected to generate $450 million in ad dollars.

The report was prepared by Vincent Letang, EVP, Global Market Intelligence at Magna.