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Online advertising to reach $160B in 5 years, and other insights from PwC’s media outlook report

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This month, PWC released its Global Entertainment & Media Outlook 2019–2023, a 5-year projection of consumer and advertiser spending. It provides revenue data and forecasts for 14 entertainment and media industry segments across 53 territories.

The report estimates that global E&M revenue will rise at a compound annual growth rate (CAGR) of 4.3% over the next five years. It’s predicted to grow from $2.1T in 2018, to $2.6T in 2023.

The report states that six segments will exhibit above-average growth and seven, below-average. One of the segments i.e., data consumption, has been left out because it does not generate revenue.

Key advertising trends publishers need to know

According to the report, online advertising will continue to grow rapidly. In 2018, $107.5B was spent on online advertising. Comparatively, ad spend on TV stood at $71B. The report forecasts that online advertising will reach $123.1B this year, while ad spend on TV remains flat. In the next five years, online advertising is projected to grow at a CAGR of 8.4%, and reach $160.8B by the end of 2023.

Mobile advertising will grow faster with a CAGR of 13.1%. This year it will account for $86.3B, or 70% of all online advertising in the US. It’s forecasted to reach 81% or $129.5B by 2023. Within mobile advertising, paid search will account for the highest spend at $37.3B this year. 

It will be followed by display advertising ($35.2B) (minus video) and mobile video advertising ($13.6B). Among these, mobile video is projected to have the highest CAGR (19.6%) followed by mobile paid search (13%), and other display (10.6%).

Non-mobile internet advertising is forecasted to decline by 16.6% between 2018 and 2023. Its market size will reduce from $36.7B in 2019 to $31.3B in 2023. However, within non-mobile advertising, video is forecasted to grow by a CAGR of 5.3% between 2018-2023. 

TV advertising spend is expected to slightly decline from $71B in 2018 to $70.6B this year. Overall, TV advertising is expected to have a CAGR of 0.3% during the forecast period and reach $72.2B by 2023. 

The researchers comment, “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.”

Newspaper advertising spend is also projected to decline during the forecast period from $14.8B to $12.3B. Print advertising will bring the bulk of advertising revenue during this period, from an estimated $9.3B this year to $6.4B in 2023. Digital ad spend for newspapers will grow at a CAGR of 2.5% from $5.4B in 2019 to $5.9B in 2023. 

Newspapers are focusing on subscription revenue. In fact, in 2018 print newspaper circulation revenues ($10.7B) overtook print advertising revenues ($10.4B). Digital circulation revenue is predicted to grow at a CAGR of 6.5% reaching $1.1B by 2023. Print circulation revenue will still be comparatively bigger at $9.5B, although it is expected to decline at a CAGR of -2.3% during the forecast period.

The report predicts remarkable growth for podcast advertising at a CAGR of 23.1%. It is forecasted to grow from $0.7B this year to $1.4B by 2023. The researchers note that the audio consumption segment is booming.

The rise – or rather resurgence – of voice is being propelled by several factors: the growing usage of smart speakers, the emergence of connected car, the power of music streaming platforms and the rapid rise of podcasts as a compelling genre.

PwC’s Global Entertainment & Media Outlook 2019–2023

In fact, podcast advertising revenue is predicted to overtake digital newspaper circulation revenue by 2022. 

The ad spend on radio will increase from $17.9B in 2019 to $18.4B in 2023.

The ad market for consumer magazines is expected to decline from $15.6B in 2019 to $13.9B in 2023. However, digital consumer magazine advertising is predicted to grow at a CAGR of 3.9%, from $6.6B in 2019 to $7.6B in 2023. 

What’s important to note is that digital consumer magazine ad spend is expected to cross print ad revenue in 2022. Print ad revenue is expected to decline from $9B in 2019 to $6.3B in 2023.

In the category of trade magazines, print ad spend is projected to decline from $2B in 2019 to $1.5B in 2023. However, digital is expected to grow from $2B to $2.4B.

“Analytics and data insights will be the core driver”

The report emphasizes that the growing trend towards personalization will shape the E&M industry in the coming years.

According to Ennèl van Eeden, Global Entertainment and Media Leader and Partner, PwC Netherlands, “The personalization wave — fuelled by evolving customer behavior — is set to be amplified by the forces of technology, scale, and aggressive investing and competition.” 

This increasingly tailored world has major implications for every E&M business across every segment. Whether the subject is business and revenue models, emerging technologies, or regulation and trust, companies must keep on top of current and future developments – and be sufficiently agile, ready to respond proactively and at a pace.

Global Entertainment & Media Outlook 2019–2023

The researchers note, “More generally, in an increasingly personalized world, analytics and data insights will be the core driver of effective, addressable advertising. 

“Existing data sets on demographics, spending patterns and interests – namely those typically found on platforms such as Facebook and Google – are useful. The next step forward, however, will be to overlay the new level of insight into such factors as affordability and ability to pay.”

Ennèl van Eeden says, “All E&M players must take the need to ‘know your customer’ more seriously, and marketers need to allocate their time and attention to new types of content and platforms — influencers, live events, ads inside apps and more. 

“Finally, companies must focus intently on their core capabilities and geographical markets, while continually scanning the horizon for new developments and regulations, and being agile in responding to technological developments such as 5G. Put simply: it’s time to get personal with consumers — or be left out of the conversation.”

Click here for PwC’s Global Entertainment & Media Outlook 2019–2023

Download WNIP’s comprehensive new report—50 Ways to Make Media Pay—an essential read for publishers looking at the multiple revenue opportunities available, whether it’s to reach new audiences or double down on existing super-users. The report is free and can be downloaded here.

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