US ad spending will show lower-than-expected gains this year due to the war in Ukraine, media investment and intelligence company Magna said in a report.
It now forecasts media owners’ advertising revenue to rise by 11.5% this year compared to the 12.6% growth expected earlier. Magna also anticipates lower-than-expected economic activity, ongoing supply chain issues, and persistent inflation.
“The Ukraine crisis has already hit consumer and business confidence,” said Vincent Létang, EVP of global market intelligence at Magna and author of the report.
“It is too early to assess the depth and length of economic repercussions, but Magna believes the US economy is strong enough to weather this new challenge,” he added.
On the positive side, midterm elections could offset the decline with revenue from political campaigns potentially reaching US$6.2 billion. This would be a 41% increase versus the 2018 midterm elections spend.
Even with the downward revision, Magna expects ad revenue to reach US$320 billion this year, exceeding the US$300 billion mark for the first time. In 2021, US ad revenue grew by a record 25% to reach US$287 billion.
The industries expected to grow advertising spend the most are technology, telecoms, entertainment, travel, and betting. In contrast, in categories hit hard by supply chain issues, such as automotive, ad spending will suffer.
Magna sees channel gains in digital media, which recorded 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.
Létang said, “Consumers will resume normal mobility and that will help out-of-home to recover by a further 11%."
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