Digital, Audio, TV, OOH To Pickup Pace
As the economy recovers faster than expected globally (GDP +6%) and in most markets, so do marketing activity and advertising spending. As seen in the GroupM report of 2021, the global advertising is to exceed $1 trillion in 2026, up from $641 billion in 2020 and $522 billion in 2016. Concentration within the industry has increased over this time- in 2020, the top 25 media companies represented 67% of total advertising revenue. That same group of companies accounted for 42% in 2016.
Even the MAGNA forecasts that global all-media advertising spending is to grow by $78bn (+14%) to $657bn in 2021, a new all-time high. MAGNA also raises its forecast for advertising market growth in 2022 to +6.6% (previously +5%). The +14% growth expectation for 2021 would represent the highest growth rate on record, beating +12.5% in 2000, and a significant increase from MAGNA’s previous global forecast (Dec. 2020: +8%).
Sunshine Sectors
Digital
There is good news for digital advertising with 26% expected growth for all forms of pure-play digital media versus 15% at the time of GroupM’s December update.
MAGNA also anticipates nearly all digital ad formats to grow by double-digits in 2021 as total digital ad sales will account for 64% of global all-media ad spend. They will reach two-thirds of all advertising sales in 2022. The explosion of ecommerce will boost search by +20% to $200 billion, while growing marketing adoption and media consumption will drive social media by +26% to $119 billion. Video ads will grow by +24% to $57 billion as short-form, long-form AVOD and OTT ad spend are all fueled by increased reach and viewing.
Television
Television bounced back in the third quarter of 2020 after the content pipeline was restored. Continued resilience is expected in 2021, with +13.2% growth in the first quarter supported by FCMG, e commerce, realty, and digital-native categories. Television is now expected to grow by 9.3% in 2021, an improvement from our prior 7.8% expectation.
MAGNA expects linear television ad sales to recover as consumer brands (e.g. automotive, drinks) compete for returning consumers in a brand-safe environment. Advertiser demand will drive CPM inflation (average +8%) which offsets eroding ratings. In addition, international sports events bring additional ad budgets: Global TV ad sales will thus grow by +3% to $153 billion.
Audio
Radio’s hyperlocal approach and digitization of channels will help the segment to recover. The decline in transit audience listeners was compensated by increased at-home listenership. The growth in listenership and revenue is expected to come primarily from Tier2 and Tier3 markets. Categories like FMCG, retail, health services, BFSI and local government will contribute to the growth. Overall, the segment will grow 18-20% in 2021.
OOH
OOH was acutely affected by restrictions on movement, which led to steep reductions in public traffic. Outdoor recovery will happen in stages and vary by format. Street furniture, billboards and transit media will recover faster, while malls and theatres are set to have a longer period of struggle.
Outdoor advertising should fare much better, growing by 19% in 2021 and then by a CAGR of 6.8% through 2026.
Slow Movers
Print ad sales will not quite stabilize as the return of key verticals (fashion, beauty, travel) will not offset the continued decline in circulation and ad pages. Newspaper and magazine ad sales will decrease by - 4% and -5% respectively.
Magazines are still going through a bad phase, however, ad revenue recovery could take a while and will be drawn out. Overall, the print will grow +13.1% because of the “easy comp” effect (revenues eroded by -40% in 2020), despite the continued slowdown in business.
GroupM report also forecasts that magazines should decline by 2.2% in 2021, with another 4.9% decline over the next five years.
Cinema
Cinema advertising to partially recover this year, although a return to 2019 levels will not likely occur any time soon. A significant negative factor for the sector is the likelihood that film studios will prioritize content development for streaming services rather than for cinemas. This would have the effect of reducing audience levels and advertiser interest over time.
Movie theatre occupancy is expected to reach around 20% by end of this year. The return of big budget movies should help the recovery for multiplexes but will not be seen until the second half of the year. FMCG brands, led by personal hygiene, e-commerce, government infrastructure projects, and tech apps are likely to contribute to the growth.
