GroupM has released its Global Mid-Year Media Forecast which is published twice a year with the goal of informing analysts and marketers of GroupM’s market observations.
“Midway through 2021, it has become apparent that the market is growing much faster than we expected and from a larger base than we previously believed. While many of these growth factors were in place before last year, the pandemic has proven to be an accelerant,” read the report.
Factors that are most tangibly contributing to accelerated growth in digital advertising include:
- Faster than expected expansions of app ecosystems
- Rapid small business formation activities
- The growing role of cross-border media marketplaces, especially involving manufacturers based in China.
- Global advertising ( except US political advertising) is expected to have a global growth of 19% in 2021, which is an improvement on this prior forecast from December, which anticipated 12% growth.
- We now expect global advertising including U.S. political ads to exceed $1 trillion in 2026, up from $641 billion in 2020and $522 billion in 2016.
- In 2020, the top 25 media companies represented 67% of total advertising revenue. That same group of 3 companies accounted for 42% in 2016.
- Between now and 2026, we expect a CAGR of 6.3%, not far from the 7.0% pace of expansion in the five years before the pandemic, 2014-2019.
- We note that during 2021, several major ad markets should see better than 20% growth. This includes expectations for the U.K. and Brazil to grow by 24% and for China to grow by 23%.
- Many others will rise by high teens, including the United States, which should grow by 17% on a comparable basis.
Other key takeaways from Global Mid-Year Media Forecast report
Television is now expected to grow by 9.3% in 2021, an improvement from our prior 7.8% expectations. Beyond this year, we expect low single-digit growth for the broadly defined medium, including what we call Connected TV+ (see sidebar for how we are defining Connected TV+).
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 U.S.-based—dominate the global industry going forward. By spending billions of dollars on content annually, Netflix, Disney, Amazon and Apple have already established a presence in almost every major market on earth.
The Traditional TV network owners are prioritizing 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, we see faster growth in Connected TV+ advertising (what we previously called “digital extensions of traditional TV”) than previously forecast, but total television advertising will generally be stable or slow-growing.
- We estimate that globally Connected TV+ inventory accounted for $16 billion in media company ad revenue, up by 25% over 2020 levels. We anticipate Connected TV+ ad revenue will grow to $31 billion globally by 2026, a 14% CAGR.
We now forecast 26% growth for all forms of pure-play digital media versus 15% at the time of our December update.
- Expectations for audio were raised significantly in this update, with a forecast now at 18% growth rather than December’s 8.7% level.
- However, following 2020’s 27% decline, even with these revisions, we do not expect the medium to return to 2019 levels any time soon.
The vast majority of radio ad inventory and the bulk of the industry’s advertiser base skews local or regional and small or medium-sized. Both factors are negative in a world increasingly oriented around larger brands with national or global orientations. Those orientations tend to cause marketers to skew their advertising budget allocations toward digital media and television.
- We forecast that newspapers will decline by 0.6% in 2021 and then continue to fall by 3.6% on average from 2021 through 2026.
- Magazines should decline by 2.2% in 2021, with another 4.9% decline over the next five years
Legislative efforts to empower publishers to negotiate collectively with Facebook and Google will help with publishers’ bottom lines, but it is unclear whether it will spur publishers to collectively invest more in their businesses. To the extent that incremental revenues generated from related licensing activity are redeployed into content, individual publishers will be poised to benefit. If this occurs, the industry might be better positioned to reduce its pace of decline.
- The outdoor advertising should fare much better, growing by 19% in 2021 and then by a CAGR of 6.8% through 2026.
- Although our 2021 forecast represents a slightly slower pace of growth than we anticipated in December (at which time we forecast 21% growth), 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. Better targeting, the capacity for real-time and/or programmatic buying and the increasing number of locations for digital signage are all positive factors.
- We expect Cinema advertising to partially recover this year, although a return to 2019 levels will not likely occur any time soon.
Other Key points
If the Olympics were canceled—due to public pressure or in reaction
to an outbreak during the games—we would expect most marketers to continue with their third-quarter media campaigns. However, limited ad inventory—especially on television—could lead to the cancellation of some media spending. We are also mindful of growing calls to boycott the 2022 Winter Olympics in Beijing, which could have similarly disruptive effects on media markets, even if total spending ultimately remained unchanged.
Looking at the data a different way, consider that the top five sellers of advertising in 2020—a group including Google, Facebook, Alibaba and Bytedance—generated $296 billion in ad revenue or 46% of the global total. Ten years ago, in 2010, the top five advertisers would have included Google, Viacom and CBS (which we include on a combined basis, given their common controlling ownership even then), News Corp. and Fox (similarly combined here), Comcast and Disney. Those companies had a combined total of $70 billion in advertising or 17% of the global total as they existed that year.