When it comes to traditional TV advertising, there is no linear path to recovery.
In its latest U.S. ad forecast for the fall, Magna found mostly good news for the ad sales market. After two quarters of stagnation, U.S. ad spending accelerated to a 4.4% year-over-year gain in the second quarter, and the overall market was up 2.9% in the first half of the year.
“Six months ago, the media industry was bracing for recession, but advertisers kept calm and continued to support their brands and sales through media investment,” Vincent Létang, evp, global market intelligence and author of the report, said in a statement. “As the U.S. economy and advertising spending were both stronger than expected so far this year, and digital media is finally recovering from its 2022 woes, Magna raises its full-year ad revenue growth forecast to 5.2% for 2023 to reach $337 billion.”
According to the report, digital media formats (search, commerce, social, pureplay short-form video) led the way in growth in the second quarter, up 8.7% year-over-year. However, the good news for ad sales doesn’t extend to traditional formats such as linear TV.
Magna found that traditional media (TV, radio, publishing, out-of-home, cinema) fell 4.1% in the second quarter after a 6% drop in Q1.
And though the digital uptick in the first half of the year extends to non-linear TV ad sales such as AVOD, CTV and FAST (up 7%), podcasting (up 14%) and DOOH (up 9%), those gains only mitigate the long-term decline of traditional formats in audience and ad sales. They don’t offset it.
Overall, Magna raised the 2023 revenue forecast for digital media owners, including Google, Meta, and Amazon, from 7.9% to 9.6%. The report notes that digital pure players will capture a record 69% of total ad spend in 2023.
Meanwhile, traditional media was downgraded from a 3.2% loss to 3.6%.
2024 and beyond
Heading into 2024, it’ll be more of the same, with digital on the rise and traditional continuing to stagnate. The report also noted that the writers strike could have a major effect in the first half of the year, with a lack of new content further accelerating the shift to digital.
Linear TV is also facing challenges of declining price and volume. Recently, buyers told Adweek that the 2023-2024 TV upfront saw CPM (cost per thousand viewers reached) rollbacks across the board, with only sports seeing growth.