The key word in Magna’s spring update to its U.S. advertising forecast is uncertainty. The global media giant says factors like inflation and a stock market dip have whacked consumer confidence, and yet core economic fundamentals remain healthy. Nevertheless, it says the current confidence crisis has already impacted economic activity in the first quarter, and that will lead to “cautiousness” in marketing decisions in the months ahead.
The result: Magna is reducing its 2025 ad market growth forecast to 4.3%, down from a December 4.9% growth projection. Excluding the impact of cyclical events like political ad spending and the Olympics, Magna says ad sales will grow 7.3%, which is better than its 6.7% previous forecast.
The biggest challenge for advertisers is the lack of visibility and the risk of a trade war, which Magna says may cause advertising budgets to face freezes or cuts in industries that are most vulnerable to global trade, supply-chain disruptions, and consumer confidence issues. That list includes consumer packaged goods companies, quick-service restaurants, and the automotive industry. Some companies may also face the dilemma of raising consumer prices or seeing reduced margins, which Magna says may impact their marketing budgets.
Yet other industries account for a sizable share of ad spend, which are somewhat immune to global costs or economic fluctuations. They include pharmaceuticals, retail, tech/telecoms, entertainment, finance and insurance, whose advertising may help offset the cuts implemented by others.
“The current — hopefully temporary — dip in confidence has already dampened the dynamics of the ad market, prompting us to revise our growth forecast for 2025,” Magna Executive VP Vincent Létang said. “While total ad spend is still expected to grow in the mid-single digits, digital media ad sales will continue to experience high-single-digit growth. In contrast, most traditional media channels may face stagnating ad revenues this year.”
Audio Spending To Reach $16 Billion
Magna’s updated outlook says the current climate will deliver a wide range of expected results in 2025. It predicts that digital pure-play companies like Google, Meta and Spotify will have the best growth rates this year, with ad revenue climbing 10% across the sector to $239 billion.
At the same time, Magna says traditional media companies are typically more vulnerable when a lack of business visibility leads some marketers to prioritize short-term goals and lower-funnel channels that are focused on selling, rather than branding, products. The result is Magna anticipates traditional media’s non-cyclical ad sales will erode 1% this year to $103 billion.
Magna says total audio media advertising spending will dip 2% this year to $16 billion.
Podcasting, which saw sales grow by double and triple digits a few years ago, is still expected to lead the way with growth in the mid- to high-single digits. Magna thinks podcast ad sales will jump 9% to $2.7 billion. Digital audio overall is forecast to see a 3.7% increase in ad revenue this year, which is a bit softer than the 4.2% predicted in December. Magna says streaming audio and podcasting ad spending will help offset a projected 3.7% drop in broadcast radio ad spending, which is a half-point lower from Magna’s December outlook.
Among the other media channels, Magna forecasts local TV sales will shrink 3.7% to $16.5 billion this year — and when factoring in last year’s political bump, local TV spending could be as much as 27% lower year-to-year. Cross-platform national television sales — including both broadcast and streaming — are expected to remain stable at around $46 billion, as continued growth in ad-supported streaming (+14%) helps offset a decline in broadcast sales (-7%).
Magna also says direct mail advertising sales will drop 3.5% to $16.8 billion. Out-of-home advertising sales are predicted to grow by 4.8% this year, to reach the $10 billion milestone driven by double-digit growth in digital display sales.
2024 Had Best Growth In A Quarter Century
Magna’s spring update also includes the last word on 2024. When analyzing fourth-quarter earnings of U.S. media companies, it found that advertising sales were once again strong across the board. Advertising sales rose by 13% year-over-year during Q4. When political ad spending is factored out, they were still up a healthy 8.6%.
Magna says for all of last year, advertising spending was up 12.4% to $380 billion — or a 9.9% jump excluding cyclical spending. It was the strongest performance in 25 years, excluding the post-COVID rebound of 2021.
Létang, co-author of the report, says the combination of a strong, stable economy and ongoing media and advertising innovation drove record ad spend growth in 2024. “Innovation will continue into 2025,” Létang said. “And most economic fundamentals remain healthy.”
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