MAGNA has released its annual forecasts for another year predicting that the APAC market will enjoy significant growth in digital advertising.
Lucy Formosa Morgan (lead image), managing director, MAGNA Australia, said: “It’s been a slower start to 2023 with challenging global economic conditions and consumers under increasing financial pressure, all of which has made for a jittery market. Much as we’re forecasting a number of the traditional channels to contract, particularly Linear TV, there are areas that remain strong, namely Digital (search, video and social) and OOH. Digital naturally is benefitting from consumption habits evolving and the traditional channels growing their digital offerings.”
The top 10 takeouts of the report are below:
- The Northern Hemisphere summer update of MAGNA’s “Global Ad Forecast” predicts media owners advertising revenues will reach $842 billion this year, +4.6 per cent growth vs. 2022 ($US805bn).
- This 2023 growth forecast is just 0.2 percentage points below MAGNA’s previous forecast (Dec. 2022: +4.8 per cent) as the deterioration of economic conditions and marketing spending in most Western markets is mitigated by stronger-than-expected growth in some markets (China, Spain), industry verticals (Retail) and media types (Retail, Social).
- Several industry verticals show counter-cyclical patterns in their marketing dynamic. Some are expected to grow strongly, in line with business recovery (Automotive, Travel), some are not necessarily expected (Retail) to grow. CPG/FMCG product categories are ramping up their spending with Search and Retail Media Networks, partly at the expense of traditional branding media, but mostly by reallocating trade marketing budgets, thus bringing new money in the advertising ecosystem.
- Traditional media companies and branding formats (Television, Audio, Publishing, OOH, Cinema) are most exposed in this uncertain business climate, as some brands reduce marketing budget or prioritize performance-based digital ad formats. Global ad revenues across traditional categories in aggregate will thus shrink by -3 per cent to $264 billion.
- Global television advertising revenues will shrink by -5% this year to $159 billion while Publishing ad sales will drop -4 per cent to $44bn. Audio Media ad revenues will be stable (-0.5 per cent to $28bn). The only traditional media categories to grow will be Out-of-Home, up +5% to reach $31 billion (catching up with pre-COVID market size), cinema (up 23 per cent to $2 billion).
- Meanwhile, digital pure-play advertising sales will grow by +8.5 per cent to reach $577 billion dollars i.e., 69 per cent of total ad sales, driven by organic growth factors (ecommerce, retail media, media consumption shifts, stabilisation in the data landscape). Search/commerce formats remain the largest ad formats, approaching the $300bn milestone (+9.1 per cent to $296 billion). Social media formats re-accelerate by +9.4 per cent to $172 billion, while short-form pure-play video advertising grows by +8.6 per cent to $71 billion.
- Retail Media Networks are expected to generate $121 billion in advertising sales this year (+12 per cent), most of it in the form of product search and ecommerce sponsorship. The bulk of these ad sales will come from ecommerce pure players, but traditional retailers are developing their media capabilities and their advertising sales will grow by +24 per cent to reach $21 billion.
- The strongest ad growth rate this year will come once again from India (+12.3 per cent to $12.6bn); India is the 11th largest market. The Chinese ad market is set to recover faster than previously expected (+8.4 per cent). At the other end of the spectrum, most Western European markets will stagnate this year: Germany, France, Italy all below +3 per cent growth all-media, and negative for traditional media owners.
- In APAC, digital advertising is powering total market growth. By format, this year’s growth comes from social (+12 per cent) and video (+11 per cent), with search also growing by +9 per cent (but already representing a huge 47 per cent of total digital budgets).
- In 2024, economic stabilisation and the return of major cyclical events will re-accelerate ad spend: +6.1 per cent to $892 billion globally. Traditional media owners’ ad revenues will recover by +1 per cent while digital pure players ad sales will increase by +8 per cent.
