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Social Media Advertising Growth Forecast Drops from 18% to 11% Amidst Uncertain Economic Climate

Advertising on social media has turned into a massive industry, with most estimates predicting that it will cross the half trillion dollar mark this year. These estimates project that the social media advertising industry will bring in around $534 billion of revenue in 2022, which makes up approximately two thirds of the total advertising industry or 65% to be precise. Initial forecasts for the growth rate that this industry might have seen were quite high, but in spite of the fact that this is the case they have diminished recently.

With all of that having been said and now out of the way, it is important to note that the initial forecast for the growth rate for social media advertising was 18%, and Magna just revised this to 11%. Market saturation in the two biggest regions, the US and China, have a role to play here because of the fact that this is the sort of thing that could potentially end up preventing any further growth from occurring.

Audience saturation is a major factor here, but budget stagnation is another thing that might be hampering social media advertising growth rates. Apple is also contributing to decreased growth rates, since its opt out by default setting is preventing advertisers and developers from using third party tracking to pad out their revenue streams.

However, major streaming platforms like Netflix are entering the fray by offering ad supported tiers at a lower subscription rate, and this might help boost revenues and sustain growth in 2022. Still, the lowered growth forecast for this industry suggests that the global recession is now fully underway, and it is impacting all sorts of sectors.

A lack of consumption in the market coupled with high saturation rates does not leave the industry with many growth avenues in the short term. It might take at least a year for the market to correct itself, during which lower than expected growth would be seen as a positive sign since it is better than the negative growth rates that may have otherwise occurred and might still happen in the coming years.


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