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 2022.
[Editor’s note: If you’re interested in media trends, the 4th 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 2022, and specific to the US.
Online advertising has not only already overtaken TV advertising in size, it’s surging past it by leaps and bounds. In last year’s PwC report, the digital advertising market was estimated to be about $15 billion larger than the TV advertising market. This year, that gap has almost doubled, as internet advertising – at almost $100 billion, is close to a $30 billion larger market than TV advertising ($71 billion).
With a strong 7.7% compound annual growth rate (CAGR) from 2017 through 2022, online advertising will be a $127 billion market by end of the forecast period, per the report. That would make it about 70% larger than the TV advertising market at that point.
As expected, mobile’s share of online ad spend is expected to grow throughout the forecast period. This year, mobile is expected to capture roughly 61% of all internet advertising revenues in the US. Fast forward to 2022, and mobile is forecast to be close to three-quarters (72%) of online ad revenues.
Among mobile advertising types, display (including video) is now expected to be larger than search throughout the forecast period, representing a shift from last year’s forecast, in which the opposite was true. Search is predicted to grow at a similar rate than display in the coming years, such that it will only inch down from 43.8% of mobile advertising spend this year to 43% in 2022. (Search tends to be a bigger advertising player on computers than on mobile devices.)
Mobile video will be the fastest-growing segment, though, with a 2017-2022 CAGR of 21.5%.
Overall, mobile advertising is projected to grow by an annual average of 13% from 2017 through 2022.
Of the “wired” (non-mobile) internet advertising types, paid search is expected to retain its lead over display throughout the forecast period. However, both will see a decline in ad spending, particularly affected by a sizable drop in non-video display advertising. (Desktop video ad spending is forecast to enjoy a 8.7% CAGR from 2017 through 2022, a more bullish estimate than was released last year.)
In a significant shift from last year’s report, PwC now says that video ad spending on mobile surpassed video ad spending on “wired” devices in 2017. (That’s in line with the recent revenue report from the IAB and PwC covering 2017 data.)
Meanwhile, “wired” internet advertising is expected to decline by a compound annual rate of 1.5% from 2017 through 2022, which is a rosier 5-year forecast than issued last year (-3.7%).
This year’s forecast is consistent with last year’s in expecting video to take a majority of “wired” display ad spend in 2021.
TV advertising spending is projected to grow slowly from $71 billion this year to $75 billion in 2022. TV’s outlook has been revised downward as revenues declined last year and traditional TV viewing continues to recede. Moreover, the success of ad-free platforms such as Netflix has put pressure on TV advertising loads, which are expected to shrink (albeit without evidence that has yet happened).
Overall, TV will grow at a compound annual rate of 1.3% from 2017 through 2022, a similar 5-year forecast to the one issued last year.
The researchers note that: “TV remains a premier advertising destination for marketers, who are willing to spend large amounts on ad campaigns, and use it as the primary vehicle for new product launches and for mass audience appeal. But, as audiences continue to shift to digital and advertisers pursue more multichannel campaigns, there is a need to develop new TV ad formats that are more likely to catch and keep viewers’ attention.”
Interestingly, online is predicted to comprise just a small portion of overall TV advertising revenues though the forecast period. Indeed, only $5.7 billion of the $74.9 billion in TV advertising revenues forecast for 2022 (or about 7.7%) are expected to be from online TV, despite its heavy skew to youth audiences.
The 5-year CAGR for online TV advertising is slowing also: at 5.9% this year, it’s below the forecasts issued last year (7.4%), in 2016 (8.9%) and in 2015 (14.4%). To put digital’s small penetration into context, advertisers are expected to spend as much on digital newspaper advertising as digital TV advertising in 2022.
Meanwhile, within the broadcast advertising segment, cable networks are predicted to see a higher advertising CAGR (1.5%) than multichannel systems (-0.2%), as the former extends its lead in ad dollars over the forecast period. Both forecast growth rates have been cut considerably from last year.
The magazine advertising market is composed of two main segments: consumer magazines; and trade magazines.
The consumer magazine advertising market in the US has an estimated value of $16.4 billion this year, and its outlook is a little more bleak this year than last. Whereas last year PwC expected revenues to remain flat through 2021, this year it expects a compound annual decline of 2.2% in the coming years, such that consumer magazine ad revenues would fall to $14.85 billion by 2022.
That seems largely due to a sizable cut in the outlook for consumer magazine digital advertising. PwC now expects a 5-year CAGR (through 2022) of 4.4% for this segment, down from its 5-year outlook of 13.1% annual growth last year.
By contrast, the print advertising portion of consumer magazine advertising has had its dark outlook slightly revised upwards. Whereas PwC last year saw a 5-year CAGR of -9.7%, this year it forecasts the annual decline to be 6.6%. Even so, digital’s growth won’t be enough to offset the print decline.
The forecast for consumer magazine digital advertising has been cut to the extent that PwC no longer expects digital advertising to surpass print advertising for consumer magazines during the forecast period (through 2022).
Meanwhile, the trade magazine market is smaller, but following somewhat similar trends. The outlook for trade magazine advertising is a little rosier than for consumer magazines, with a 5-year CAGR of 0.6% (from $4.24 billion this year to $4.4 billion in 2022).
In this case digital (CAGR of 9.3%) will be just making up for print’s losses (CAGR of -8.4%).
Unlike consumer magazines, PwC expects that digital will overtake print in trade magazine ad spend next year. (Last year’s forecast had that milestone taking place a year later, in 2020.)
The radio advertising market in the US is expected to remain relatively flat through 2022 on the back of resilient consumption and wide reach.
The radio ad market will increase from $17.7 billion this year to $18.4 billion in 2022. Radio advertising is predicted to have a 2017-2022 CAGR of 0.9%.
Not surprisingly, terrestrial radio online advertising will be the fastest-growing segment, with a CAGR of 7.9%. However, as with TV (and unlike print and out-of-home), digital ad revenues will represent just a small portion of overall radio revenues. Forecast to comprise 9.3% share of total radio ad revenues this year, online radio is projected to grow to close to 12% share of radio revenues by 2022.
The dominant form will continue to be terrestrial radio broadcast advertising, although terrestrial radio ad revenues are predicted to remain mostly stagnant between this year ($15.9 billion) and 2022 ($16 billion).
The hardest hit of the media types examined, newspaper advertising is one of only two markets (with consumer magazine advertising the other) expected to see a decline in revenues between this year ($15.8 billion) and 2022 ($12.6 billion).
Unlike magazine advertising, digital advertising in the newspaper market is simply not growing quickly enough (2017-2022 CAGR of 2.2%) to offset print advertising losses (CAGR of -10.4%).
Forecast to account for about one-third (33.0%) of newspaper ad revenues this year, digital is expected to grow to 45.1% share of ad revenues in 2022.
Meanwhile, each of the three major segments of print advertising (classified, national and retail) is predicted to drop by an annual rate of at least 9%, with classified having the worst outlook (of -11.0%).
In a major shift from last year’s figures, this year PwC says that newspapers derive almost twice as many revenues from circulation ($28 billion this year) as from advertising ($15.8 billion). In that sense, it’s like both the consumer magazine and trade magazine markets, both of which are more reliant on circulation than advertising revenues (particularly trade magazines).
Newspapers’ trend towards circulation revenue as opposed to advertising revenue is also true on a global scale.
The vast majority of newspaper circulation revenues in the US will continue to be print-based, at $11.2 billion (in 2022) versus digital’s $1.15 billion.
Out-of-home (OOH) advertising has the strongest prognosis of the traditional media types, which makes sense considering it has now logged 8 consecutive years’ worth of quarterly year-over-year ad spending increases.
Still, out-of-home’s healthy outlook is mostly the result of projected growth in digital out-of-home advertising. During the forecast period of 2017-2022, digital is expected to grow at a compound annual rate of 8%, bringing it from 40.7% share of total OOH ad revenues this year to 47.9% share in 2022. (Physical out-of-home advertising’s CAGR is just 0.4% for the 2017-2022 period.)
Overall, OOH ad revenues are predicted to grow from $9.65 billion last year to $11.5 billion in 2022, for a 2017-2022 CAGR of 3.6%.
Video Game Advertising
This is the second year that we’ve included video game advertising in this overview. Why?
The video game advertising market is significantly larger than the cinema advertising market.
This year, about $1.5 billion will be spent advertising in video games, per PwC, with that growing to $1.8 billion in 2022, a reduced forecast from last year. That’s still just a small slice of the overall $28.8 billion video game market at the end of the forecast period.
The video game advertising forecast excludes e-sports streaming advertising. This is a nascent market expected to total just $58 million this year, though it should almost double to $111 million in 2022.
While it’s one of the smallest media of those identified in this article, cinema advertising benefits from having the most positive receptiveness from consumers of any advertising format in the US.
Cinema advertising is predicted to grow from $920 million this year to $1.02 billion in 2022, with a 2017-2022 CAGR of 2.7%. Cinema advertising revenues will continue to be dwarfed by box office revenues, which are rising worldwide and forecast to grow at a 1.8% annual clip from 2017 ($10.3 billion) through 2022 ($11.25 billion).
A new medium included in this year’s report, podcast advertising remains very small but on the rise due to growing audience numbers.
Indeed, podcast advertising has the fastest growth forecast of any medium covered in this article (2017-2022 CAGR of 23.1%), which is likely due to its starting from a very small base. This year PwC estimates that advertisers will spend $369 million advertising to podcast listeners, with that figure more than doubling by 2022 ($747 million).
For more on US media audiences, see the 4th edition of MarketingCharts’ US Media Audience Demographics report.