The Russian invasion of Ukraine and the economic and geopolitical uncertainty will reduce US advertising spending in 2022, advertising company Magna says in an updated forecast. However, media revenue should still grow 11% this year to pass USD 300 billion. The revised outlook is down by 1%.

Most media types will grow advertising revenues: Search (+17%), Social (+16%), OOH (+11%) and Cross-Platform Video (+8%).

The geopolitical crisis leads Magna to anticipate lower-than-expected economic activity, continued supply issues and protracted inflation. On the other hand, organic growth drivers remain strong and Mid-Term elections will bring USD 6.2 billion in incremental ad revenues (+41% vs 2018 cycle), the company says in its forecast.

Overall, the company reduces its 2022 growth forecast by one percentage point vs. pre-Ukraine expectations: media owners advertising revenues will grow by +11.5% to reach USD 320 billion, passing USD 300 billion milestone for the first time.

Technology, Telecoms, Entertainment, Travel and Betting are among the industries expected to grow advertising spending the most. Automotive continues to struggle with supply issues, Magna says.

“The Ukraine crisis has already hit consumer and business confidence. It will slow down economic growth in 2022 and fuel the inflationary trend. It is too early to assess the depth and length of economic repercussions, but Magna believes the U.S. economy is strong enough to weather this new challenge”, says Vincent Létang, EVP and author of the report.

The forecast says the economic sanctions against Russia will also hurt the global economy and rekindle the global supply crisis. Pre-Ukraine, U.S. consumer inflation was expected to slow from 7% in 2021 to +3.8% this year, but now prices, costs and wages are likely to stay inflationary (5% to 7%) for at least one more year.

”Despite the geopolitical crisis and stress on energy markets, the U.S. economy’s fundamentals remain strong for now, with low unemployment, stronger savings than pre-COVID, and consumer mobility expected to resume its recovery as we emerge from the Omicron wave of January 2022.”

“Moreover, marketing activity and advertising demand will continue to be driven by both organic and cyclical factors in 2022: marketing innovation will continue to fuel competition and advertising spending; Winter Olympics and mid-term elections are generating incremental advertising spending.”

”The major cyclical driver in 2022 will be the November elections. With USD 5.7 billion already raised by February according to the Federal Election Commission (+72% vs 2018 at the same stage), Magna now expects incremental advertising revenues generated by political campaigns to reach USD 6.2 billion for media owners for the entire cycle. This would represent an increase of +41% vs the previous mid-term cycle in 2018.”