According to the latest PwC annual Entertainment & Media Outlook report, containing projections for online and offline media advertising markets through 2020, TV and out-of-home advertising have the healthiest futures, while the outlook for print (at least in print format) is dim.
US Advertising Media Market Sizes (US $ Billions; 2016 vs. 2020)
2016 Bil $
2020 Bil $
Source: PwC, June 2016
Online Advertising is expected to overtake TV advertising in size next year. The report predicts that online advertising spending will exceed $75 billion next year, surpassing the $74.7 billion projected for TV. Online advertising is expected to grow at a compound annual rate of 9.4% from 2015 through 2020, compared to TV’s 3.2% rate, says the report.
Mobile’s share of online ad spend is expected to grow throughout the forecast period, increasing to a predicted 49% share in 2020. Among mobile advertising types, display (including video) is expected to remain larger than search, rising from 58% share of mobile ad spend to 62% in 2020. Mobile video will be the fastest-growing segment.
Despite retaining its majority share through 2020, paid search’s CAGR of 3.6% will be eclipsed by video ads’ forecast CAGR of 19.3%, which will double desktop video advertising spending from an estimated $5.1 billion this year to $10.2 billion in 2020.
Display (non-video) ads are predicted to have the slowest growth, with display ad revenues forecast to shrink from $10.9 billion this year to $9.5 billion in 2020.
TV Advertising spending is projected to grow from $73 billion this year to $74.7 billion next year, at which point it will cede its status as the top media advertising market. Overall, TV will grow at a compound annual rate of 3.2% from 2015 through 2020. There is an increasing trend towards the usage of other screens, according to the report. Not solely the viewing of video content, but households simultaneously browsing apps and websites on smartphones and other connected devices while watching TV.
Even so, says the report, online is predicted to comprise just a small portion of overall TV advertising revenues though the forecast period. Only $5.4 billion of the $81.7 billion in TV advertising revenues forecast for 2020 are expected to be from online TV. In the broadcast advertising segment, however, broadcast networks are forecast to see a slightly higher advertising CAGR (3.9%) than cable networks (3.7%).
The Radio Advertising market in the US is expected to remain relatively flat through the forecast period, increasing marginally from $17.8 billion this year to $18.4 billion in 2020.
Terrestrial radio online advertising will be the fastest-growing segment, with a CAGR of 7.8%. Digital ad revenues will represent just a small portion of overall radio revenues, forecast to comprise 7.7% share of total radio ad revenues this year, online radio is projected to grow to 9.7% share of radio revenues by 2020. The dominant form will continue to be terrestrial radio broadcast advertising, with ad revenues predicted to remain mostly stagnant between $16.2 billion this year and $16.4 billion 2020.
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 $16.8 billion this year, and will remain essentially flat through 2020. Digital advertising is projected to overtake print advertising as the leading source of consumer magazine advertising revenues in 2020 ($9.2 billion and $7.7 billion, respectively).
Meanwhile, the trade magazine market is smaller, but following similar trends, says the report. Digital will overtake print in trade magazine ad spend in 2020, with the former boasting a CAGR of 11% as opposed to the latter’s -6% projected CAGR. As such, digital ad revenues are projected to increase from 35% of trade magazine ad revenues this year to a 51.4% share in 2020.
The hardest hit of the media types examined, Newspaper Advertising is the only market expected to see a decline in revenues between this year and 2020, falling from $18.8 billion to $14.9 billion. Digital advertising in the newspaper market is simply not growing quickly enough to offset print advertising losses. Forecast to account for 26.5% of newspaper ad revenues this year, digital is expected to grow to 37.9% share of revenues in 2020.
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 8.6%, with classified having the worst outlook (of almost -9.7%). With newspaper advertising on such a sharp decline, circulation revenues will be almost as large as advertising revenues by 2020. The vast majority of circulation revenues will continue to be print-based, at $11.1 billion versus digital’s $1 billion.
Out-of-Home (OOH) advertising has the strongest prognosis of the traditional media types, though its healthy outlook is mostly the result of strong projected growth in digital out-of-home advertising. Overall, OOH ad revenues are predicted to grow from $9.2 billion last year to $10.9 billion in 2020. During the forecast period, digital is expected to grow at a compound annual rate of 9.4%, bringing it from 38.3% share of total OOH ad revenues this year to 46.2% share in 2020.
The smallest medium of those identified in this article, Cinema Advertising is predicted to grow from $857 million this year to $908 million in 2020, with a 2015-2020 CAGR of 1.6%. Cinema advertising revenues will continue to be dwarfed by box office revenues, which are expected to grow at a 1.2% annual clip from 2015 through 2020 ($11 billion).
For additional information from PwC, the Complete Report or Segments may be purchased here.