Magna downgraded its 2022 forecast for social media advertising growth worldwide from 18% to 11%, per a revised estimate released recently.
In the December 2021 update, MAGNA was predicting +18% in 2022 (half the growth of 2021). In this update it downgraded the growth forecast by seven percentage points to +11%. MAGNA says this is because social ad formats are hit by a combination of headwinds, including client saturation, audience saturation and targeting restrictions.
According to the report, in advanced mature markets, consumer brands’ social media budgets have reached a scale where further growth has come under greater financial scrutiny and become more vulnerable to the current or expected business outlook. In 2020-21, millions of small businesses started social media marketing during and after COVID. This is still happening in 2022, but at a slower pace.
The report also found that reach and time spent with social apps are nearly saturated in all advanced markets (Western World, China), and advertising growth in 2021 was almost entirely driven by pricing rather than volume. “The plateauing in usage and ad impressions is increasingly clear this year, and incumbent players have reported declines in some mature markets,” MAGNA said.
Apple’s privacy changes are also one of the most important reasons for the current and expected decline in social media ad growth. The impact was gradual: it started to visibly affect attractiveness and ad sales around the end of 2021, particularly for Meta and Snap.
In its fourth quarter earnings call, Meta CFO Dave Wehner said Apple’s App Tracking Transparency will decrease the company’s sales in 2022 by about $10 billion.
Snap said in its fourth quarter earnings that its ad business bounced back faster than expected from the effects of Apple’s ATT, generating $1.3 billion in revenue in Q4 2021.
The report also states that in a social media market currently growing only +10% or less, the rise of TikTok (already 10% market share in the US) is an additional headwind for incumbent social platforms.
According to a recent report from Insider Intelligence, TikTok’s global ad revenues will triple by 2022, surpassing Snapchat and Twitter. China’s popular short video app is projected to have more than $11 billion in ad revenue by 2022, more than half of which comes from the United States.