The Russian invasion of Ukraine has already made waves in the ad community — from brand safety issues to marketers pausing campaigns. Now, it’s beginning to affect forecasts of how much will be spent on advertising this year.
IPG’s Magna unit, one of the three principal advertising prognosticators among the agency holding companies, revised its growth estimate of total 2022 U.S. ad spend to be a slightly more sobering 11.5 percent compared to last year. That estimate would still put spending at $320 billion — marking the first time U.S. ad spend is expected to break $300 billion, but one percentage point less than the 12.6 percent it had forecast before Russia’s invasion.
Magna’s executive vp of global market intelligence Vincent Létang pins the slight downturn on that global crisis, with a secondary contributor being continued problems with supply chains in several industries. “The Ukraine crisis has already hit consumer and business confidence. It will slow down economic growth in 2022 and fuel the inflationary trend,” said Létang in prepared comments when the revised estimate was released on Monday. “It is too early to assess the depth and length of economic repercussions, but Magna believes the U.S. economy is strong enough to weather this new challenge.”
Létang pointed to a robust political ad season as a main driver of the American economy that will prevent further downturn. Citing Federal Election Commission data as the basis for Magna’s projections, he said he expects media to bring in $6.2 billion in this election cycle, a 41 percent jump over the comparable 2018 cycle. The primary beneficiary of this political largesse is expected to be local media, which Magna predicts will secure $4.2 billion, a 26 percent jump over 2018.
Also helping keep the expected growth to remain significant are ad categories that continue to spend heavily in 2022, including technology, telecoms, entertainment, travel and betting, all of which Magna expects to grow faster than average. Automotive, meanwhile, continues to struggle with supply chain issues.
Magna expects cinema advertising to be the fastest growing medium by percentage, at 168 percent to $450 million, but that’s off a very small number and relatively anemic growth in 2021 over 2020 due to the movie theater business being largely shut down during the pandemic. Connected TV/streaming is still forecast to grow 27 percent over its $5.8 billion haul in 2021, while short-form video is forecast to rise 23 percent over its $16 billion in 2021.
Meanwhile, Brian Wieser, global president of business intelligence at WPP’s GroupM — and one of the other two prognosticators of media spend, along with Publicis’ Zenith agency — said he doesn’t plan to change his numbers just yet.
“Overall we continue to see global economic activity progressing in a relatively positive direction, despite all of the very real concerns impacting much of the world… [U]nderlying economic conditions continue to generally be supportive of the levels of advertising growth we most recently forecast at the end of 2021,” he wrote in a recent report. Publicis’ Zenith agency didn’t immediately return a request for comment on whether its estimates would change in light of the invasion.
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