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ADVERTISING OUTLOOK

Global advertising revenue will slow down in 2022, predicts study

By our News Team | 2022

Revenue will still be above pre-Covid levels, but significantly down on 2021. Social media ads to take a big hit.

Global advertising revenues will grow by 9.2% this year to nearly US$828-billion – 32% above the pre-Covid level of 2019, but a slowdown from the 2021 level when the industry was in a “once-in-a-lifetime planetary alignment of factors”.

The outlook is contained in a recently released study by international media investment and research company Magna, which added that it has downgraded its 2022 growth expectations from 12% (predicted in December last year) to an average 9% growth across all media. 

Advertising Outlook

Image by Megan Rexazin from Pixabay

Among the reasons listed are a global economic slowdown, mounting restrictions on data-driven targeting affecting digital advertising, and the Russia-Ukraine conflict.

Nevertheless, 9% in 2022 would remain above pre-Covid growth rates, which averaged 7% between 2015 and 2019.

“Offsetting the effect of a weaker economic environment, organic drivers continue to fuel marketing activity and advertising spending,” Magna said. 

“Among these: the competition between brands to gain leadership in new, fast-growing product verticals driven by lifestyle or regulatory changes (e.g. sports betting, food apps, direct-to-consumer disrupters), and the growing adoption of digital advertising by both local businesses and consumer brands, often at the expense of below-the-line marketing channels.”

The report says most industry verticals are expected to stabilise or increase ad spend this year. Travel, Entertainment, Betting and Technology are expected to grow the most, while Automotive and CPG/FMCG budgets may be under pressure due to supply chain and cost issues.

The EMEA economy and ad markets will slow down more than other regions in 2022 because of the impact of the Ukraine war on trade and energy costs and energy supply. Additional headwinds include supply chain issues and the slowdown in Chinese imports, hurting manufacturing industries.

Social media advertising spend slows down

One of the surprises is the strong predicted decline in social media advertising. Growth in 2021 was around 36%, but this is expected to halve to 18% growth in 2022.

According to Magna, this is because social ad formats are being hit by a combination of headwinds, among them: 

  • Client saturation. In advanced mature markets, the social media budgets of consumer brands have reached a scale where any further growth comes under more financial scrutiny and becomes more vulnerable to current or anticipated business outlook. In 2020-21, millions of small businesses kick-started social media marketing during and after Covid. This is still happening in 2022, but at a slower pace.
  • Audience saturation. 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.
  • Targeting Restrictions: Since Mid-2021 the new Apple policy allowed millions of social media app users to opt out from sharing their device IDs and therefore prevented them from being targeted based on their data. Furthermore, it was difficult to tell what products users exposed to social media campaigns were purchasing because of that advertising spending. The impact was gradual: it started to visibly affect attractiveness and ad sales around the end of 2021, particularly for Meta and Snap.

“Past a difficult 2022, when ad sales must compare with a 2021 year that was still mostly without targeting limitations, the market should stabilise or recover some strength,” Magna said.

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    Dr Kin Kariisa

    Group CEO - Next Media

    Dr. Kin Kariisa is an extraordinary force at the helm of Next Media Services, a conglomerate encompassing NBS TV, Nile Post, Sanyuka TV, Next Radio, Salam TV, Next Communication, Next Productions, and an array of other influential enterprises. His dynamic role as Chief Executive Officer exemplifies his unwavering commitment to shaping media, business, and community landscapes.
    With an esteemed academic journey, Dr. Kariisa’s accolades include an Honorary PhD in exemplary community service from the United Graduate College inTexas, an MBA from United States International University in Nairobi, Kenya, a Master’s degree in Computer Engineering from Huazong University in China, and a Bachelor’s degree in Statistics from Makerere University.
    Dr. Kariisa pursued PhD research in Computer Security and Identity Management at Security of Systems Group, Radboud University in Nijmegen, Netherlands. As a dynamic educator, he has shared his expertise as a lecturer of e-Government and Information Security at both Makerere University and Radboud University.

    Dr Kin did his PhD research in Computer Security and Identity Management at Security of Systems Group, Radbond University in Nigmegen, Netherlands. He previously served as a lecturer of e-Government and Information Security at Makerere University in Kampala, Uganda and Radbond University in Netherlands.

    Dr Kin did his postgraduate courses in Strategic Business Management, Strategic Leadership Communication and Strategies for Leading Successful Change Initiatives at Harvard University, Boston USA.

    • Other current and previous roles played by Dr Kin Kariisa:
    • Lecturer of e-Government and Information Security to graduate students at Makerere University, Kampala and Radbond University in the Netherlands
    • Director of Eco Bank Uganda Limited, one of the largest banks in Africa
    • Chairman of the National Association of Broadcasters, an umbrella industry association for all Television, Radio and online broadcasters in Uganda.
    • Chairman of Board of Directors of Nile Hotel International, that owns the leading hotel in Uganda, Kampala Serena Hotel.
    • Chairman of Board of Directors of Soliton Telmec Uganda, the leading telecom company in Optic fibre business managing over 80% of optic fibre in Uganda.