Forecast: Global advertising to grow by 19%

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Midway through 2021, advertising growth for the year is far exceeding previous expectations thanks, in no small part, to the pandemic, according to media investment firm GroupM. This has led to a major revision of its global forecast for this year and beyond.

Many of the factors causing this faster growth were in place pre-pandemic, but Covid has only served as an accelerant. These include faster than expected expansions of app ecosystems, rapid small business formation activities and the growing role of cross-border media marketplaces, especially involving manufacturers based in China.

Other changes are taking root as well. Traditional TV network owners are prioritising investments in content delivered on streaming services. While many of them will offer some ad inventory and capture a share of total TV advertising, those gains will only offset reduced spending on the traditional form of the medium. Consequently, GroupM sees faster growth in Connected TV+ advertising (what GroupM previously called digital extensions of traditional TV) than previously forecast, but total television advertising will generally be stable or slow-growing.

In total, GroupM expects global advertising to grow by 19 per cent (excluding US political advertising) during 2021, a significant upward revision from its December forecast. This represents a level of ad revenue that is 15 per cent higher than 2019, as 2020 only experienced a 3.5 per cent decline on its revised estimates. High growth should persist for the foreseeable future, too.

GroupM now expects global advertising including US political to exceed $1 trillion in 2026, up from $641 billion in 2020 and $522 billion in 2016. Of note, concentration within the industry has increased over this time: in 2020, the top 25 media companies represented 67 per cent of total advertising revenue. That same group of companies accounted for 42 per cent in 2016.

Looking at individual markets, several should see better than 20 per cent growth, including the UK, Brazil, China and India. Many others will rise by the high teens, including Canada, Australia and the US.

Most of the improvement in growth reflected in this update belongs to digital media. GroupM now forecasts 26 per cent growth for all forms of pure-play digital media versus 15 per cent at the time of its December update.

Other areas considered in detail as 2021 reaches the halfway point:

  • Television advertising: Television is now expected to grow by 9.3 per cent in 2021, an improvement from its prior 7.8 per cent expectation.
    • Beyond this year, GroupM expects low single-digit growth for the broadly defined medium, including what it calls Connected TV+).
    • GroupM estimates that globally Connected TV+ inventory accounted for $16 billion in media company ad revenue, up by 25 per cent over 2020 levels. GroupM anticipates Connected TV+ ad revenue will grow to $31 billion globally by 2026.
    • TV’s unique reach advantage is set to erode at a relatively rapid pace in the near term as investments in ad-free or ad-light streaming video services—mostly US-based—dominate the global industry going forward. By spending billions of dollars on content.
  • Audio advertising: Expectations for audio were raised significantly in this update, with a forecast now at 18 per cent growth rather than December’s 8.7 per cent level.
    • However, following 2020’s 27 per cent decline, even with these revisions, we do not expect the medium to return to 2019 levels any time soon.
  • OOH advertising: Outdoor advertising should fare well, growing by 19 per cent in 2021.
    • Although GroupM’s 2021 forecast represents a slightly slower pace of growth than it anticipated in December, 2022 expectations are now slightly higher than before.
    • Longer-term, OOH is benefitting from growing interest in the medium and is aided by new digital formats that allow for incremental sources of demand to emerge.

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