PwC has issued its latest annual Global Entertainment & Media Outlook report, a comprehensive study that contains projections for online and offline media advertising markets through 2023.
[Editor’s note: If you’re interested in media trends, the 5th annual edition of our Media Audience Demographics report is for you! The report – available for purchase here – breaks down the audience composition of several online and offline media types by age, income and race/ethnicity.]
The following is a look at some of the highlights for major media markets covered by PwC, ordered by projected size in 2023, and specific to the US.
Online advertising dwarfs TV advertising in terms of spend – and the gap is getting larger each year. Updated estimates for 2018’s online advertising spend puts it at $107.5 billion, a figure more than $36 billion higher than the spend on television ($71.0 billion). In 2019, PwC forecasts that online advertising will reach $123.1 billion – making that spend more than $50 billion higher than TV, which remains largely flat.
The latest estimates predict a strong 8.4% compound annual growth rate (CAGR) from 2018 through to 2023, by which time the online advertising market in the US is predicted to hit $160.8 billion in value. That would make the dollar spend for online advertising more than twice as high as TV by that time.
As expected, mobile will grow faster than the online advertising market as a whole for the forecast period, boasting a CAGR of 13.1%. In 2019, mobile is expected to account for 70% ($86.3 billion) of all online advertising in the US. By 2023, that percentage is expected to reach around 81% ($129.5 billion). This makes PwC’s renewed mobile figures for this year far more bullish than those released last year.
Within mobile advertising specifically, paid search is expected to account for the largest amount of spend this year ($37.3 billion), followed by display advertising excluding video ($35.2 billion) and mobile video advertising ($13.6 billion). While these rankings are expected to stay in order by 2023, mobile video will see the greatest CAGR (19.6%), ahead of mobile paid search (13.0%) and other display (10.6%).
Of the non-mobile internet advertising figures (termed “wired” by PwC), the picture is quite different. Overall, non-mobile internet advertising is expected to decline by 16.6% (-3.6% on CAGR basis) between 2018 and 2023, when the market size will be $31.3 billion. This compares to the 2019 figure of $36.7 billion.
Within non-mobile, all categories are forecast to decline with the exception of video advertising, which is expected to grow by a compound annual rate of 5.3% across the 2018-2023 period. PwC’s estimate for non-mobile video in 2019 is $6.4 billion, a figure predicted to reach $7.8 billion by 2023. Despite that growth mobile video advertising ($25.1 billion) is projected to be more than 3 times the size of non-mobile video advertising by 2023.
The end of the forecast period (2023) will also see non-mobile video advertising surpass other display internet advertising, which is forecast to fall sharply from $10.4 billion in 2019 to $6.3 billion.
2019’s figures for TV advertising ($70.6 billion) are slightly lower than 2018’s ($71.0 billion) in this latest report. Overall, TV is only projected to have slight growth to 2023, when the market size is expected to be $72.2 billion – making the CAGR for 2018 to 2023 a paltry 0.3%. These figures have been revised down once again from last year’s advertising forecast, as traditional TV continues to see a decline in viewing – and also as Gen Xers are now spending more time with mobile devices that they are with the traditional box.
The decline in traditional TV viewing comes at a moment when the total combined subscriptions for Netflix and Amazon Prime have passed the 150 million mark, a point not missed by the researchers, who note that: “Growth in the US TV ad market is slowing, fueled by a combination of factors including the rapid rise of ad-free, stand-alone streaming services like Netflix and Amazon, a wider general decline in linear TV viewing habits, the ongoing shift of ad budgets to digital media and increasing levels of cord-cutting among pay-TV subscribers.”
The analysts also remark that “the TV industry is fighting to maintain its share of TV ad spend with the development of better measurement and targeting capability, like addressable TV products.” Again, this is backed up by research from Blockgraph, which highlights that better targeting capabilities are the most desired improvement in TV advertising.
Even with the desire for better targeting and a move by consumers to spend more time online, the forecast for online TV advertising sees it taking only a small share of the total TV ad spend over time. In 2019, spend on online TV advertising is expected to be only $5.0 billion, with a modest rise to $5.8 billion by 2023. Furthermore, the 5-year CAGR has also slowed to 4.6%, a percentage below the 5-year forecasts issued last year (5.9%) and in 2017 (7.4%).
Meanwhile, within the broadcast TV advertising segment, overall growth is expected to be flat – with a CAGR of 0% as a whole. Cable networks are expected to see just 0.6% CAGR in the 5 years to 2023, with multichannel systems advertising declining (-1.1% CAGR).
The market for radio advertising is expected to remain somewhat flat overall through 2023, as Americans keep tuning in to AM/FM – most often as it’s easiest to listen to in the car.
Total ad spend on radio will increase from $17.9 billion in 2019 to $18.4 billion in 2023. The CAGR from 2018-2023 is expected to be 0.7%.
With listeners continuing their habit of tuning into the airwaves via traditional broadcast, advertising through this medium will continue to take the lion’s share of spend both in 2019 ($16.0 billion) and 2023 ($16.2 billion).
Although only a small share of the total, terrestrial radio online advertising is expected to see the largest CAGR of 7.1%. Spend in 2023 is forecast to hit $2.4 billion, up from $1.8 billion in 2019. In line with this trend, smart speaker owners generally increase their consumption of AM/FM radio, even if this ends up being delivered through the internet.
Satellite radio advertising represents an even smaller part of the total. In 2023, ad dollars here will only reach $209 million, although this is up from $181 million in 2019.
The magazine advertising market is composed of two main segments: consumer magazines; and trade magazines.
The consumer magazine ad market is expected to be worth $15.6 billion this year, but fall to $13.9 billion in 2023. As such, the compound annual decline is 2.8%, which is more pessimistic than the 5-year figure expected last year (2.2%).
Digital consumer magazine advertising is expected to grow from $6.6 billion in 2019 to $7.6 billion in 2023. Its CAGR is projected to be 3.9%, and digital consumer magazine ad spend is forecast to surpass print ad revenues in 2022 – a reversal of last year’s position. But these expected growth rates are significantly down on the predictions given in earlier analyses – for example, in 2018 the 5-year CAGR for digital consumer magazine advertising was set at 4.4%, while in 2017 a very bullish 13.1% was predicted.
As such, it’s likely that any hope for digital to make up for the print decline has long gone. The report expects print ad revenues of $9.0 billion in 2019, $6.3 billion in 2023, and a 2018-2023 CAGR of -8.3%.
The harsh reality for consumer magazine publishers is spelled out by the researchers [edited for brevity]: “Although publishers are increasingly finding ways to generate revenue from their websites, Web-only publishing operations rarely supplant a print and online model. In a world that was once synonymous with extravagant salaries and expenses, US magazine publishers like Hearst and Condé Nast now balk at requests for expensive photo shoots and US$5-a-word journalists.” Given the economic situation, advertisers may wish to use this leverage to their advantage.
By contrast, trade magazine ad revenue is expected to see digital make up for most of the shortfall in print. As trade print ad spend declines from $2.0 billion in 2019 to $1.5 billion in 2023, digital will rise from $2.0 billion to $2.4 billion in the same period. This means that last year’s prediction that 2019 will see digital trade magazine ad spend pass print has largely borne out.
As is the case with consumer magazines, newspaper advertising is also expected to see a fall in ad spend – one of the only two ad markets forecast to drop. And looking back at the data, it appears that newspapers haven’t transitioned as well as their magazine counterparts in terms of making the most of digital advertising (instead likely pivoting more to subscription revenues). In 2016, digital ad revenues for consumer magazines surpassed those of newspapers, and are set to stay considerably larger.
Overall, newspaper advertising is expected to decline from $14.8 billion in 2019 to $12.3 billion in 2023. The 5-year CAGR to 2023 is -4.7%.
Print advertising will still continue to account for the majority of ad revenues throughout the forecast period, at $9.3 billion in 2019 and $6.4 billion in 2023. This makes the compound annual rate from 2018 onwards -9.3%.
Digital will only see modest growth that doesn’t make up for the shortfall. 2019 is set to see $5.4 billion in ad dollars go to digital newspaper advertising, rising to $5.9 billion by 2023. Digital newspaper ad revenues will only see compound annual growth of 2.5%.
Newspapers are looking to win online subscribers as part of their strategy. While digital circulation revenues are expected to see healthy percentage growth (CAGR 6.5%), they remain far lower as a total ($1.1 billion by 2023) when compared to print circulation income ($9.5 billion in 2023, -2.3% CAGR).
This year’s report shows that in 2018, print newspaper circulation revenues ($10.7 billion) edged just ahead of print advertising revenues ($10.4 billion). This year that gap is even more pronounced, as 2019 sees income from circulation being $10.5 billion, putting it more than $1 billion ahead of the income from print ads.
In a similar position to last year, out-of-home (OOH) has the strongest outlook among the traditional media formats. Quarterly trend data on OOH since 2012 has shown almost consistent growth, particularly as tech brands turn to this tried-and-tested medium in an effort to reach more customers.
On the whole, OOH spend is buoyed almost entirely by growth in digital OOH advertising, though, which is expected to rise to $5.7 billion in 2023 (where it will almost hit parity with physical) from $4.4 billion this year. By contrast, physical OOH will remain largely flat at around $6.0 billion every year from 2019 through to 2023.
Video Game Advertising
It may surprise you to find out that video game advertising is a larger market than either cinema advertising or newer formats such as podcast and digital music streaming advertising.
This year, about $1.6 billion will be spent on advertising in video games, growing to $1.9 billion by 2023. It is still however only a small part of the income of the video game industry, which is a $25.6 billion market in the US, per PwC.
Separate from the above figures, e-sports streaming advertising is set to grow at a healthy 16.5% CAGR through 2023, but represents a small part of the overall picture ($56 million in 2019, $101 million in 2023).
This is the second year with podcast ad revenues reported by PwC – and for good reason, as podcast listener numbers continue to grow as do dynamically inserted podcast ads which provide more flexibility for podcast publishers and advertisers alike.
The compound annual percentage growth forecast is well into the double digits, at 23.1% through to 2023, by which time podcast advertising will hit $1.4 billion – making that number double this year’s ($0.7 billion). PwC also cites other research that finds that, on the whole, podcast listeners typically have higher incomes and educational attainment levels than average.
For an interesting comparison that demonstrates the speed of change in media, it’s worth noting that podcast advertising revenues will exceed digital newspaper circulation revenues by 2022. As such, it’s no surprise to find many legacy publishers branching out into podcasts.
Digital Music Streaming Advertising
New for this year is digital music streaming advertising. This market has opened as a result of ad-supported free tiers from services such as Spotify.
While not expected to see growth as strong as in podcasts, the 2019 music streaming ad market is larger ($1.1 billion) but will be overtaken by podcasts in 2021, as its CAGR is a more modest 4.6% in the 5-year period to 2023.
As with podcasts, the growth in mobile for listening has seen some interesting developments. A study in 2018 from Merkle noted that the platform with the highest mobile share of ad spend is audio – ahead of video and even social. While digital music streaming advertising will remain much smaller, marketers looking to reach consumers as they are on the move may wish to take note.
While not the smallest advertising market of those listed for 2019 (when spend will be $1.0 billion), cinema will be at the end by 2023 ($1.1 billion) even as it experiences a CAGR of 3.6%.
The reason why the silver screen is worth noting in this analysis is that, according to Kantar, consumers enjoy seeing advertisements in the cinema more than in any other media studied – a situation that was also the case in a 2018 study of advertising receptiveness.
Cinema advertising is much smaller than box office takings ($11.1 billion in 2019, $12.5 billion in 2023), but its compound annual percentage growth rate is higher.
For more on US media audiences, make sure to check out the 5th edition of MarketingCharts’ US Media Audience Demographics report.