Major advertising firms are predicting that marketing revenue growth will shrink in 2023 to lower than expected.
- Magna is a global media investment and intelligence company that is part of Interpublic Group of Cos. Mediabrands.
- The company revealed in a Sunday press release that global advertising growth is slowing going into 2023. Magna predicted a 6.3% growth earlier this year and now it has scaled down to 4.8%.
- Magna says the declining outlook is “due to the deteriorating macroeconomic outlook.”
- This year has seen major profits for the advertising industry, growing by 6.6% and taking in $795 billion, but the company is warning that spending growth is slowing as economic uncertainty continues to grow.
- Media and data company GroupM similarly predicts a 5.9% growth for 2023, down from its own 6.4% estimate, Wall Street Journal reports.
Why it’s News
Marketing is still expected to grow but recession, inflation, and unemployment fears are chilling the market. There are still plentiful opportunities for advertising coming down the pipeline though.
Magna’s projections are varied depending on which industry is being affected by different economic factors. Industries like entertainment, travel, and gambling have seen a boom following the pandemic and are expected to continue growing in spite of stressors. Automotive advertising will likely decline in the near future due to ongoing supply chain issues until markets stabilize, according to Magna.
Traditional advertising with publishing and television ad is also expected to shrink by 3% and 4% respectively. Digital advertising is expected to grow by 8% as consumers continue to move online.
Backing up a Bit
As we previously reported, the strange factors of the coming recession are set to make it different than previous recessions. Americans feel generally optimistic about the job market and don’t fear losing their jobs despite predictions of high unemployment as the Federal Reserve’s high-interest rates continue to constrict the market.
Magna may have reasons to feel confident about high consumer spending in certain corners if large portions of the U.S. economy continue to operate confidently.
“The economy has slowed down more than expected six months ago, which was partly mitigated in the U.S. because political spending was even stronger than expected six months ago. Of course, it’s not going to help when it comes to 2023. We’ve reduced the growth expectation for almost every media category for next year, but we still expect that the market will stabilize and not fall,” says Magna EVP Vincent Létang.