That according to IPG Mediabrands’ Magna, the latest agency group to release a summer update for its Global Advertising Forecast.
The update says that while a robust economic recovery in 2021 drove ad revenues up by a record 27% in 2021, we are currently experiencing a slowdown caused by rising energy prices and increased uncertainty will impact advertising revenues in 2022.
As a result, Magna has reduced its full year 2022 forecast from 8.4% in December to 7.0% now.
But what do these global forces mean for Canada?
“While we were happy to see overall spend levels initially bounce back this year, there are concerns of slowdown due to economic uncertainty in the remaining month,” says Leanne Burnett-Wood, president, investments for Magna. “Media mix, which has experienced significant fluxes over the past two years, has stabilized, emphasizing video, whether digital, television or out-of-home. While we remain optimistic for the back half of the year, we anticipate some categories may face unavoidable challenges.”
Magna expects that Canadian digital advertising sales will increase this year by 10%, compared to +35% in 2021. One factor in the decline being the effect privacy changes made by Apple have had on ad-reliant companies like Facebook and Snapchat. The biggest impact will be felt by social ad sales, which are predicted to gain only 8% in 2022, while search will rise 12% and digital video will grow 16%.
Television ad sales are predicted to grow 1% thanks in part to the Winter Olympic games held in Beijing in February, which are more popular than the Summer games in Canada. Television sales will also benefit from an NHL hockey season that finally saw the full return of fans to Canadian stadiums and several Canadian teams making a strong showing in the playoffs.
In addition, television sales benefited from a strong NFL post season and Super Bowl. Super Bowl LVI was the most watched program in Canada in the first quarter of 2022.
OOH is forecast to continue its recovery this year and increase by 14% over 2021. Bell Media, for example, reported in its Q1 earnings call that demand is up as leisure and travel activities resumed more fully with the easing of COVID restrictions. Meanwhile, radio sales are predicted to fall 2% in 2022, after rebounding by 7% in 2021. Print will decline 12%, Magna predicts.
Looking ahead to 2023, Magna believes Canada’s advertising market will grow 4.5% to $21.5 billion, a reduction from the 5.0% growth expected back in December. Digital advertising sales will again lead growth at 7%, while television sales will decline by 3% due to the lack of Olympic games.
