Ad Media Revenue To Reach $326B In 2023: Magna

Magna anticipates all-media ad revenues to increase by 3.4% in 2023 compared with 3.7% in previous forecasts, as the market grows to a new all-time high of $326 billion. Neutralizing cyclical events in 2022 and 2023, non-cyclical advertising spend that excludes political and Olympic spend will grow by 5.2% this year.

Compare that with U.S. media advertising revenue that grew by 6% to reach $315 billion in 2022, excluding cyclical advertising spend.

Advertising spend slowed significantly through the second half of 2022 and fourth-quarter ad sales were flat year-over-year.

“The slowdown of the market in the fourth quarter of 2022, based on our analysis of media companies and advertising revenues, were a bit stronger than we expected,” said Vincent Letang, executive vice president of global market intelligence at Magna, told Search & Performance Marketing Daily. “It’s in line with the average long-term growth in the U.S. advertising market, but 4Q continued to slow.”



Magna U.S. released its U.S. ad forecast for March 2023 on Monday. Letang pointed to market indicators based on mixed U.S. economic signals such as slow but continued gross domestic product (GDP) growth, receding inflation and resilience in the job market, as financial markers generate anxiety among consumers and businesses.

“In 2020, we saw that even when the economy is awful, total advertising spend keeps growing because there are other drivers behind it,” he said. ‘Despite GDP shrinking in 2020, total advertising spend essentially was stable. During the recession of 2008 it fell by 15%.”

In a good year, the market grows faster than GDP. When GDP is low like now there’s still factors to keep the market going.

Those stabilizing factors include ecommerce fueling retail media networks and digital formats. The organic growth of streaming video is another example, with Netflix and others supporting less expensive ad plans, providing more scale for long-form streaming than in the past.

National long-form video — linear TV and streaming — will stabilize around $44 billion, as growth in over-the-top (OTT) ad sales will offset the decline of linear TV.

“It’s becoming very attractive to brands,” Letang said. “Media technology innovation and changes in consumer media consumption is generating new opportunities, improving media investments.”

The counter cyclical delay cycle for the media industry should also help this year, he said.

Digital advertising will continue to grow by 9%, driven by organic adoption while linear advertising formats, more vulnerable to the uncertain economic environment, will fall by 4%.

Letang also pointed to automotive and search as growth areas. Consumers are finally ready to replace their cars.

“Car dealers and manufacturers will need to ramp up their advertising,” he said. “They can’t take it for granted that consumers will go back to buying the same brands.”

Media owners already saw a rebound in ad spend in the fourth quarter. Travel and Entertainment sectors will also grow ad spending in 2023, while Consumer Product Goods, Restaurants, and Retail brands might struggle.

Search and product search at retail media will remain the largest ad formats for brands, growing by 10% to $125 billion in 2023. 

“Google Search slowed a bit this past year, but Amazon did well,” he said. “Walmart and Target developed their advertising revenue from the base, but now it’s really taking off.”

While other advertising formats might see a slowdown, paid search, organic search and commerce search continue to grow -- from the large search engines such as Google and Bing to specialized search engines like Zillow, Redfin and WebMD, aggregation sites like Reddit and online marketplaces such as Fiverr.

Search is one of the formats with the lowest barrier to entry for advertisers, according to Magna. There are very few creative requirements. Budgets can be tiny and still impactful, as major engines continue to create new tools to help automate search campaigns to make them easier to set up and more impactful.  

“Paid Search is larger than ever, but what sometimes falls through the cracks is optimizing content to take advantage of SEO opportunities and algorithms,” according to the report released in November.

Magna’s November 2022 report shows search and ecommerce advertising formats such as Google, Amazon, and retail media networks will continue to be driven by the expansion of ecommerce to CPG. Social media formats such as Facebook, Instagram, and TikTok will re-accelerate after stalling in 2022.

Direct-mail sales are forecast to fall 4% to 16.8 billion in 2023, or 7% when including the impact of political spending.

Several price increases were implemented in 2022 in an attempt to keep pace with inflation. 

Cross-platform audio ad sales will stabilize around $17 billion, publishing ad sales will fall 5% to $15 billion, and out-of-home will continue to outperform other traditional media channels in 2023, growing by 6% to $9.6 billion.

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