Magna forecast the highest growth in North America (+11%) followed by LATAM (+10%), APAC (+8%) and EMEA (+7.5%).
Magna has released its mid-year forecast for the global advertising market predicting growth of 9.2 percent worldwide, a drop from the previously forecast 12 percent, citing an economic slowdown and increasing restrictions on data-driven targeting of digital ads.
Globally, media owners’ advertising revenues will hit nearly $828 billion which is 32% above the pre-COVID level of 2019.
Magna said it was expecting the global advertising market to “slow down significantly in 2022” following unprecedented levels of growth in 2021 (Global +23%, U.S. +26%) caused by a “once-in-a-lifetime ‘planetary alignment’ of factors: the V-shaped economic recovery and the marketing consequences of post-COVID lifestyles.”
The company said that the reduction of its forecast from +12% to +9% is due to two main headwinds: a global economic slowdown and the mounting restrictions to data-driven targeting affecting digital advertising sales (e.g. the impact Apple iOS changes have had on display and social ad formats.
Asia Pacific forecast to grow 8%
The Asia Pacific advertising economy will grow by +8% this year, following the 2021 rebound (+18%), forecasts Magna, adding that in 2023, the Asia Pacific ad market will expand by +7%, slightly higher than the global average of +6% and in line with the pre-COVID long-term regional growth.
Growth in the region is powered by large markets such as China (+8% in 2022, +9% expected in 2023) and India (+15% in 2022, +16% expected in 2023).
The APAC advertising market is concentrated around the two largest markets China and Japan, combining to represent 71% of total regional ad spend and ad revenues.
In 2022, the strongest growth in APAC will come from India (+15%), Malaysia (+13%), Pakistan (+12%), Philippines (+12%), and Singapore (+11%).
The slowest growth said Magna, will come from Hong Kong (+3%), Vietnam (+5%), Thailand (+5%), and Japan (+8%), adding that “no markets in APAC will decline in 2022.”
“The experience of Asia Pacific with COVID throughout 2021 has been mixed,” Magna said in a statement.
“Many countries in Southeast Asia suffered their worst outbreaks in the last few months of 2021 into early 2022 (Thailand, Philippines, Vietnam, Indonesia), which have caused pullbacks on advertising activity. Vaccine rollouts are also mixed. China and Japan have vaccinated three-quarters or more of their population, whereas India’s vaccination rate is lagging and only increasing slowly.”
The report pointed to the COVID and a home-centric lifestyle having changed consumer behavior towards more streaming, more eCommerce, and more integration of digital platforms into day-to-day lives, driving digital advertising spending, much as it has in the US and Western Europe.
“While some markets continued to bear the effect of mixed Covid impacts throughout 2021, the APAC region advertising revenues have continued to rise to +35% above pre-COVID spending levels,” said Leigh Terry, CEO Mediabrands APAC.
“Not surprisingly this has been largely driven by digital advertising, as digital consumption is even further integrated into consumer day-to-day lives. APAC consumption is already more significantly skewed towards Ecommerce than it is in western markets.”
“In 2023, the Asia Pacific ad market will expand by +7%, slightly higher than the global average of +6% and in line with the pre-COVID long-term regional growth.”
Gurpreet Singh, Managing Director MAGNA APAC added: “Most of the APAC markets recovered the loss with double digit growth in 2021 over reduced 2020 base.”
“This gap has largely been filled by massive growth in digital spends while spends on linear media have still not recovered back to pre-covid levels in most of the APAC markets. This year digital media is expected to hit the highest share of spends across the majority of APAC markets, including some of those markets which had been TV dominant until a couple of years back. Digital spends have grown much faster than all pre-covid predictions.”
Key findings
- After a strong start to the year, advertising spending is slowing down amidst economic uncertainty, but organic and cyclical growth factors will support marketing activity and advertising demand.
- Digital advertising sales will grow by +13% this year to reach 65% of total ad sales. Digital Video will be the fastest-growing ad format (+16%) followed by Search (+15%), and Social (+11%).
- The advertising revenues of traditional media companies will grow in most media: Television and Audio (both +4%), Out-of-Home (+10%), while Print advertising will decline slightly (-3%).
- Traditional media companies are deriving a growing percentage of advertising revenues from digital formats (AVOD, CTV, audio streaming, podcasting, etc). In some markets these are already contributing 10% of ad revenues in TV, 20% in audio media, and 50% in publishing, stabilizing revenues for publishers.
- Television advertising suffers from rapid erosion of linear viewing, offset by growing AVOD revenues, strong pricing in the first half, and extra spending around cyclical events (mid-terms, Olympics, FIFA World Cup).
- APAC advertising revenues will increase by +7% to $273bn, 35% above the pre-COVID spending level, driven by digital advertising growth (+12%).
- The second largest ad market, China (15% of global advertising revenues), will grow below average (+8%) due to endemic difficulties (stricter regulatory environment for digital media, severe COVID lockdowns).
- Among other top 15 advertising markets, the strongest growth will come from India (+15%) and SouthKorea (+11%) while Germany (+6%) and Italy (+3%) will suffer the most from the post-Ukraine economic environment.
