There’s good news for the advertising world. A major ad forecasting firm, Magna, has raised its full-year projection for ad spending in the United States for 2023. This upward revision is driven by a more favorable economic outlook and continued heavy investment in specific digital advertising formats.
Magna has increased its forecast for US ad growth this year to 5.2%. This would amount to a total of $337 billion, a boost from its earlier prediction of 4.2% made in June. It’s important to note that these figures exclude spending related to cyclical events.
Despite earlier concerns of an impending economic downturn, advertisers have maintained their spending to support their brands and sales. While challenges persist, there’s cautious optimism about advertising spending and revenues in the second half of the year.
Several sectors, including travel, pharmaceuticals, retail, and consumer packaged goods, have shown strong spending in the second quarter. Automotive and entertainment brands saw relatively flat or slightly increased spending, while the financial and technology sectors experienced year-over-year declines.
Food and beverage giants like Kraft Heinz and Molson Coors have announced increased investments in marketing, with Molson Coors planning to boost its marketing spending by $100 million in the second half of the year.
The growth in US advertising spending is primarily fueled by digital media leaders such as Alphabet’s Google, Meta’s Facebook, and Amazon, with an anticipated increase of 9.6% in 2023. A notable segment within this digital landscape is retail media, where companies like Walmart and Uber Technologies allow advertisers to leverage their customer data for targeted ad campaigns.
In contrast, traditional media is expected to see a 3.6% decline in advertising spending this year, according to Magna’s projections.
Looking ahead to 2024, Magna predicts a similar trend, with ad sales (excluding cyclical events like elections and the Summer Olympics) expected to decrease by 3% for national TV and 5% for local TV.
Additionally, the ongoing writers’ strike could impact traditional TV by potentially causing a shortage of new content in the first half of 2024, further accelerating long-term declines in viewership.
The shift in ad spending toward digital platforms is challenging traditional TV networks, as advertisers seek more targeted approaches to reach potential customers, a departure from the broader reach associated with traditional methods.
In addition, a recent sport indicated that the US digital advertising’s growth was expected to decelerate in 2023, marking the slowest pace of growth in the last 14 years.