PwC has issued its latest annual Entertainment & Media Outlook report, which contains projections for online and offline media advertising markets through 2019. The outlook for traditional media advertising is similar to previous forecasts in that TV and out-of-home advertising have the healthiest future, while the outlook for print (at least in print format) is dim. As consumer behavior migrates online, so will advertiser spending, with two notable shifts expected to take place in 2019.
[Editor’s note: MarketingCharts has been studying the media advertising market with some fervor, and two recent studies are available for interested readers. The first – newly-released – MarketingCharts report examines the stated influence of each of the advertising media identified below (and some others) on consumers’ purchases, sorted by gender, generation and household income. The second – released in late 2014, analyzes the demographic composition of various major media and their sub-segments.]
The following is a look at some of the highlights for major media markets covered by PwC, ordered by projected size in 2019 and specific to the US.
Online advertising is expected to overtake TV advertising in size in 2019, with the former reaching $83.9 billion on the back of a 2014-2019 compound annual growth rate (CAGR) of 11.15%.
As expected, mobile’s share of online ad spend is expected to grow throughout the forecast period, increasing from a forecast 30% share this year to a predicted 46% share in 2019, buoyed by a 2014-2019 CAGR of 25.6%.
Of the “wired” internet advertising types, paid search is expected to retain its dominance, growing from $19.7 billion this year (51% share of wired internet advertising) to $22.1 billion in 2019 (49% share). Paid search’s CAGR of 3.2% will be eclipsed, however, by video ads’ forecast CAGR of 15%, which will take desktop video from an estimated $3.8 billion in revenues this year to $6.6 billion in 2019.
Meanwhile, among the other “wired” internet advertising categories, display ads are predicted to have the slowest growth, with a CAGR of 1.8%. Display ad revenues are forecast to grow from $12.2 billion this year to $13.2 billion in 2019.
TV advertising spending is projected to grow from $69.2 billion last year to $71.1 billion this year and $81 billion in 2019 (2014-2019 CAGR of 3.2%), at which point it will cede its status as the top media advertising market.
The researchers note that: “While the growth of Internet advertising has taken some revenue away from traditional TV, it has not, so far, had a particularly damaging impact. Advertising campaigns tend to use digital advertising as a complement to TV advertising, both are often used rather than one replacing the other. Online TV/video Internet advertising is not solely controlled by specialist online TV services. The traditional networks have also entered this space (through services such as ABC Online, CBS.com, Fox.com, NBC.com) so – as Internet advertising grows more popular – these services will also benefit from additional revenues.”
Even so, online is predicted to comprise just a small portion of overall TV advertising revenues. Indeed, just $6.8 billion of the $81 billion in TV advertising revenues forecast for 2019 (or about 8.4%) are expected to be from online TV, despite online TV advertising revenues’ CAGR of 14.4%.
Broadcast networks are forecast to see a higher advertising CAGR (3.7%) than cable networks (3%).
A detailed breakdown of the US TV advertising market(up to Q1 2014) and its influence can be found here.
The radio advertising market in the US is expected to remain relatively flat over the duration of the forecast period, increasing marginally from $17.4 billion this year to $18.1 billion in 2019, and with a 2014-2019 CAGR of 1.1%.
Not surprisingly, terrestrial radio online advertising will be the fastest-growing segment, with a CAGR of 8.6%. However, as with TV (and unlike print and out-of-home), digital ad revenues will represent just a fraction of overall radio revenues. Forecast to comprise 6.8% share of total radio ad revenues this year, online radio is projected to grow to 9.1% share of radio revenues by 2019.
The dominant form will continue to be terrestrial radio broadcast advertising, although terrestrial radio ad revenues are predicted to remain stagnant between this year ($16.1 billion) and 2019 ($16.3 billion).
The magazine advertising market is composed of two main segments: consumer magazines; and trade magazines.
The consumer magazine advertising market in the US is projected to be valued at $16.8 billion this year, and will remain essentially flat through 2019, when its value is predicted to be $17 billion. Growth in digital advertising (2014-2019 CAGR of 17.6%) will be just enough to offset declining print revenues (CAGR of -8.2%). In fact, digital advertising is projected to overtake print advertising as the dominant source of consumer magazine advertising revenues in 2019 ($8.7 billion and $8.4 billion, respectively).
Meanwhile, the trade magazine market is smaller, but following similar trends. With an overall CAGR of just 0.8% between 2014 ($4.5 billion) and 2019 ($4.7 billion), digital will close in on print advertising, with the former boasting a CAGR of 11.9% as opposed to the latter’s -5.3% projected CAGR. As such, digital ad revenues are projected to increase from 31.6% of trade magazine ad revenues this year ($1.4 of $4.5 billion) to 47.4% share in 2019 ($2.2 of $4.7 billion).
The hardest hit of the media types examined, newspaper advertising is the only market expected to decline between this year and 2019, falling from $20.2 billion to $16 billion. Unlike magazine advertising, digital advertising in the newspaper market is simply not growing quickly enough (2014-2019 CAGR of 3.4%) to offset print advertising losses (CAGR of -8.7%). Forecast to account for 23.6% of newspaper ad revenues this year, digital is expected to grow to 33.9% share of revenues in 2019.
Meanwhile, each of the three major segments of print advertising (classified, national and retail) is forecast to drop by an annual rate of at least 8%, with classified having the worst outlook (-9.1%).
Out-of-home (OOH) advertising has the strongest prognosis of the traditional media types, though its healthy outlook is mostly the result of strong projected growth in digital out-of-home advertising. Overall, OOH ad revenues are predicted to grow from $8.4 billion last year to $8.9 billion this year and $10.7 billion in 2019, for a 2014-2019 CAGR of 4.8%.
During the forecast period, digital is expected to grow at a compound annual rate of 9.8%, bringing it from 34.7% share of total OOH ad revenues this year to 43.5% share in 2019.
The smallest medium of those listed, cinema advertising is predicted to grow from $814 million last year to $839 million this year and $898 million in 2019, for a 2014-2019 CAGR of 2%. Cinema advertising revenues will continue to be dwarfed by box office revenues, which are expected to grow at a 4% annual clip from 2014 ($10.4 billion) through 2019 ($12.5 billion).
For more on US media advertising and audiences, see the MarketingCharts reports: