Despite fears of a recession, worrisome inflation, and general unease about the macroeconomic environment, GroupM says there’s still reason to be cautiously optimistic about the ad market in 2023, with Canada growing ahead of the global market.

According to the latest instalment of its twice-a-year “This Year, Next Year” forecast, GroupM says Canadian ad revenue should finish the year at $18.8 billion, up 5.8%, with continued growth of 8% projected for 2023. That makes Canada the 7^th largest ad market in the world, behind France at $24.6 billion, and ahead of Brazil at $15.4 billion

“This growth [in Canada] is led by pure-play digital advertising, which accounts for the largest share (72.8%) in 2022 and is expected to continue rising above pre-pandemic levels,” said the report’s authors.

In its mid-year forecast in June, GroupM projected that global ad revenue would be up 8.4%, but now says the year will see growth of just 6.5%, and projects growth of 5.9% for 2023.

It said the drop is largely attributable to a steep pullback in China, where the outlook went from 3.3% growth to a 0.6% decline, and the U.S., which dropped from 10.1% growth to a more modest 7.1%. The U.S. and China account for 55.5% of all ad revenue globally in 2022.

Inflation is a key theme throughout the report, including for Canada. “The Canadian economy currently faces an environment with high inflation and rising interest rates driven by supply-chain disruptions and rising commodity prices following the Ukraine-Russia war,” wrote the authors. “Relative to other G7 countries, inflation is slightly lower and has decelerated from earlier this year to 6.9% (as of October 2022). Overall, economic growth is expected to slow with the IMF projecting 3.3% real GDP growth in 2022, declining to 1.5% in 2023.

After digital, TV remains the most significant medium in Canada, representing 12.9% of all advertising, and is expected to grow 6.6% this year. “There is a continued progressive shift from linear to connected TV, and an increase in connected TV inventory, despite the cost of TV (while inflated) being lower than some of the connected TV options available,” they wrote.

Some of the other noteworthy bullet points from the report include:

• Traditional pay TV penetration will fall below 50% of U.S. households in 2025, down from roughly 80% in 2018, and more than 60% now.
• Retail media, one of the fast-growing segments, should reach $110.7 billion globally this year.
• Digital audio now represents one-quarter of total audio advertising.
• Print ad revenue will continue to fall, reaching parity with OOH in 2027.
• Global newspaper ad revenue, which stood at $61.7 billion in 2014, will fall to $27.6 billion by 2027, while global magazine revenue of $34.6 billion will fall to $16 billion.