A major ad forecaster said advertising is still expected to grow in 2023 despite mixed economic signals, a resiliency that industry pros say would have been unlikely during earlier periods of turbulence.
Media owners’ U.S. ad revenues are expected to grow 3.4% to $326 billion this year, according to a quarterly forecast from Magna, a media intelligence and investment firm that is part of Interpublic Group of Cos.’ Mediabrands. That is slightly down from its December estimate of 3.7% growth.
The firm expects little or no growth in the first half of the year, followed by a recovery in the second half as the economy becomes more stable. The economy was showing early signs of improvement in January and February, including receding inflation and slow but steady growth in gross domestic product, but financial turbulence in recent weeks has caused anxiety for consumers and businesses.
“We were always expecting more slowdown in ’23 with tepid macroeconomic expectations. Now, three months later, we see that the economic signals are actually not so bad—and some of them are improved if we compare to three months ago,” said Vincent Létang, executive vice president of global market intelligence at Magna and author of the report.
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Mr. Létang said certain factors creating growth in the advertising market are mitigating the difficult environment. He said drivers of growth of spending into advertising include the rise of streaming, ad-supported video and rising investment in consumer-facing businesses that have been offering advertisers ways to reach consumers using retailer data.
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“If it was 20 years ago, in [this] economic climate, we would probably expect advertising spending to fall, but we don’t…because there are organic growth factors to put against this macroeconomic environment that is uncertain indeed,” he said. “The organic drivers that boosted the ad market in 2021 and the first half of 2022 are still around and mitigating the impact of stressful economic signals.”
Automotive ad spending is also expected to rebound in 2023, according to Magna. The automotive industry in 2022 suffered from economic concerns, inflation and supply constraints due to production disruptions. That has led to a pent-up demand that could cause auto marketing to grow this year, Mr. Létang said.
Magna said car sales will grow by 10% in 2023, leading to a 10% to 15% increase in advertising spending by car dealers and car brands.
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The firm also expects out-of-home advertising, which includes placements like billboards, to grow 6%, reaching $9.6 billion this year.