Digital Ad Sales to Overtake Offline in 2019?

September 27, 2017

While digital has well and truly overtaken TV as the single largest US advertising medium, offline media still command a majority of ad sales in the US, per new data from MAGNA [pdf]. But if MAGNA’s forecast proves correct, it won’t be long before digital will exceed offline sales – perhaps as early as 2019.

MAGNA’s latest forecast indicates that offline ad sales will exceed $100 billion ($100.9B) in the US this year, though that would represent a 4.9% decline from $106 billion last year.

Digital ad sales, for their part, should amount to $84 billion this year, MAGNA expects. That would mark a substantial 16% rise from last year, which is in line with past trends documented in revenue reports from the IAB.

More important is the trajectory of growth: offline ad sales are expected to decline by a compound annual growth rate (CAGR) of 3.7% through 2022, while digital ad sales will enjoy an almost double-digit CAGR of 9.5% through the forecast period.

Applying those growth forecasts to the current estimated sizes means that by 2019, digital ad sales, at close to $101 billion, will have surpassed offline ad sales (~$93.5 billion).

It’s worth noting that these figures exclude the influence of Political & Olympic (P&O) spending, which tends to benefit TV. However, the inclusion of P&O spending would still not change the base forecast of 2019 being the year that this threshold is met.

Offline ad sales are represented by national TV (-1.1% CAGR excluding P&O), local TV (-2.6% CAGR excluding P&O), print (-17.2% CAGR), radio (-4.7% CAGR), out-of-home and cinema (+2.7% CAGR).

Mobile to Capture Half of All US Ad Revenues in 2022?

Mobile devices last year grew to account for the majority of US digital ad revenues for the first time, and should represent more than one-quarter (27%) of all US ad sales this year, per MAGNA’s forecast.

Mobile happens to be the fastest-rising advertising medium of all outlined in MAGNA’s report, with a projected CAGR of 17.4% through the 5-year period ending in 2022.

Using the same calculations as above, that would mean that mobile ad sales would exceed $110 billion in 2022, roughly half of total ad spend including P&O ($220B) and more than half if excluding P&O (~$216B).

Sure, these are fairly academic projections, and this is just one forecast, but the figures underline the ever-growing importance of digital and mobile advertising.

Here’s one more fun nugget using the same CAGR extrapolations, and it deals with social advertising. Social ad spend has been burgeoning of late, as well represented by Facebook’s rapid growth.

MAGNA estimates that social will constitute more than one-third (34.9%) of digital ad sales this year, for a total of $22.1 billion. (For comparison, the IAB estimated that social ad revenues totaled $16.3 billion last year.)

As the second-fastest growing advertising channel, with a projected CAGR of 14.2% through 2022, social advertising is predicted to be a $43 billion market by the end of the forecast period.

What would that mean? Almost one-third of all digital ad spend would be directed towards social media, and 1 in every 5 advertising dollars transacted in the US would be allocated to social media.

It’s a changing world in advertising, indeed…

See MAGNA’s full forecast, including detailed breakdowns for each medium, here [pdf].


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