• by Jack Loechner , Staff Writer @mp_research, December 29, 2015

According to a new study by McKinsey, global spending on media is forecast to rise at a compound annual rate of 5.1% during the next five years, to $2.1 trillion in 2019, from $1.6 trillion in 2014.

Digital advertising was the fastest-growing category in 2014, says the report, with a 16.1% increase in spending, followed by video games at 14.3% and Sbroadband at 9.2%. Both digital advertising and broadband are entirely digital, and digital components fueled the growth of spending on video games. At the other end of the growth spectrum, expenditures for traditional non digital media, such as consumer magazines and newspapers, continued to decline.

According to the report, digital advertising, video games, and broadband are expected to be the fastest-growing segments over the next five years, with projected compound annual increases of 12.7%, 8.1%, and 7.8%, respectively, to 2019.

Spending on cinema will expand at a projected 5.4% compound annual growth rate, followed by TV advertising at 5.0%. While today’s stronger segments will continue to be strong over the next five years, they will probably grow more slowly.

The report expects expenditures on the slower growing or declining segments of 2014 to grow more quickly or to decline more slowly over the next five years.

These patterns reflect two primary drivers of spending on media:

• The shift to digital. Spending on media continues to move at a rapid pace from traditional to digital products and services. By 2019, the report says that digital will account for more than 50% of the overall total for media
• Consumer spending on digital video will overtake spending on physical media, two years earlier than previously forecast. Digital, consisting of Internet and mobile ads, will become the largest advertising category by 2017, surpassing TV one year earlier than forecast
• Mobile will more than double its share of the digital-ad market. This rapid shift to digital is driven in part by the growing number of connected consumers, the expansion of mobile telephony, and higher rates of mobile-broadband adoption

Developing markets. Increasingly, developing markets play a critical role in the growth of spending on global media, concludes the report. Not only because traditional media remain strong in these regions but also because the markets, from Mexico and China to India and Malaysia, anticipate healthy economic expansion and higher household incomes. This growth will boost spending on both ads and content across the region. In fact, the Asia–Pacific media market will be the largest source of absolute growth for the global industry during the next five years.

For more information from McKinsey, please visit here.