A note from Bob Abbate: this recent report is one of the most comprehensive reports on ad spending that I’ve seen. A few brief observations… the gap between online advertising and TV advertising – the next-largest advertising market – continues to expand. Updated estimates for 2021’s online advertising spend puts it at $189.3 billion, some 2.7x higher than spend on TV ads ($69.7 billion). I wonder if radio will ever recover from its 2019 high. Ad spending on digital music streaming and podcasts are on dramatic upward swings. Digital “newspaper” advertising is poised to overtake traditional newspaper advertising. Overall, 2021’s ad revenue reports indicate that the ad business is set for continued growth.
PwC has released its latest annual Global Entertainment & Media Outlook report, a wide-ranging and in-depth study that contains projections for online and offline media advertising markets through 2026.
[Editor’s note: If you’re interested in media trends, the 8th 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.]
After 2021 saw a rebound in the advertising market following 2020’s COVID disruption, this year indicates that the ad business is set for continued growth. Here’s a look at some of the highlights for major media markets covered by PwC, ordered by forecast size in 2026, and specific to the US.
Online Advertising
US digital advertising continues its rapid ascent: last year it grew faster than at any point in the previous 15 years. As such, the gap between online advertising and TV advertising – the next-largest advertising market – continues to expand. Updated estimates for 2021’s online advertising spend puts it at $189.3 billion, some 2.7x higher than spend on TV ads ($69.7 billion). This year, PwC forecasts that online advertising spending will jump to $218 billion — making the spend more than triple that of TV, which is expected to continue only a muted growth rate.
The latest estimates predict a 7.99% compound annual growth rate (CAGR) from 2021 through to 2026, at which time the online advertising market in the US is expected to reach $278 billion. By 2026, the dollar spend on online advertising is forecast to be more than 3.8 times that of TV advertising spend.
This year mobile is expected to account for 72.8% of total US online ad spend. That share is expected to grow to 75.6% by 2026, when mobile advertising is predicted to exceed $210 billion. For the forecast period, mobile will have a CAGR of 9.2%.
Taking a closer look at mobile advertising, paid search is expected to account for the largest portion of spend this year ($64.2 billion), followed by other display advertising, excluding video ($61.7 billion) and mobile video advertising ($32.7 billion). These rankings are expected to maintain the same order in 2026. However, mobile video advertising is forecast to have the fastest CAGR through the forecast period (10.3%), followed by paid search (9.3%) and other display (8.6%).
As with last year, the newest estimates show a 4.7% 5-year CAGR for wired internet advertising. By 2026, this will be a ~$68 billion market.
Indeed, within wired non-mobile internet advertising, all categories are predicted to increase. Unlike last year’s forecast which called for decreases in other display advertising (excluding video) and paid search, this year’s edition predicts positive 5-year CAGR’s of 3.7% and 0.38%, respectively. Video advertising is predicted to have the fastest growth rate (CAGR of 12.5%) among wired internet ad types.
Meanwhile, an emerging and fast-rising internet advertising type is connected-TV (CTV) advertising. Other research indicates that this form of ad spend is expected to rise quickly and gain a greater share of video ad spend.
In 2022, CTV in-stream video internet advertising is expected to reach $10.8 billion. Although it accounts for a fractional share of total internet advertising, its value is expected to continue to grow, surpassing $17.5 billion by 2026 for a 2021-2026 CAGR of 16.76%, the fastest of all digital ad types covered in this part of the report (excludes digital audio).
TV Advertising
Linear TV viewing enjoyed a slight rebound last year, but is forecast to fall behind digital video in viewing time in the US by 2024 in what will be a monumental milestone.
The US TV advertising market recovered somewhat last year, with a 4.2% year-over-year increase, per the report, almost matching its pre-pandemic 2019 total. PwC estimates that the TV ad market will grow again this year by a very modest 1.3%, in so doing surpassing its 2019 total ($71.1 billion versus $70.2 billion). And while growth is forecast for the next 2 years, the firm then calls for declines in 2025 and 2026. In other words, PwC predicts that the US TV advertising market will peak in 2024. (This stands in contrast to eMarketer, which believes that the US TV ad spend has already peaked.)
TV advertising’s overall 5-year CAGR for 2021-2026 is expected to be just 0.75%. This year’s forecast excludes connected TV, which was moved to the internet advertising section of the report. Nonetheless, online TV advertising (“which counts revenue from ad spend on broadcast TV content viewed online via broadcaster-owned websites and apps”) will be the fastest-growing of the TV advertising sub-segments, with a CAGR of 5.98%. By contrast, cable network advertising (contained in the multichannel TV advertising sub-segment) will grow by just 0.66%, while broadcast network advertising (contained in the terrestrial TV advertising sub-segment) will also register a sub-1% CAGR, of 0.95%.
Radio Advertising
As with the other markets analyzed, radio advertising rebounded from pandemic losses last year, although unlike TV, it is yet to approach its 2019 total. Total ad spend on radio rose from $14 billion in 2020 to $15.5 billion in 2021, still trailing 2019’s $18.4 billion. [Note: Radio figures also include advertising in Canada.]
Recovery will take some time, with ad spend in 2022 estimated to reach $15.5 billion, a roughly 3.5% rise. However, the forecast calls for radio advertising to increase at a CAGR of just 1.48% throughout the forecast 2021-2026 period, meaning that by 2026 it will still be well behind its 2019 total.
Traditional broadcasting still makes up the largest share of radio spend and is expected to remain that way through 2026. Spend on traditional radio in 2022 is forecast to reach $12.8 billion, but only inch up through 2026 ($12.7 billion). This forecast is down from last year’s, which predicted a rise to $15.1 billion by 2025.
Although terrestrial online advertising accounts for a much smaller share of total radio advertising, it continues to see a faster 5-year CAGR (5.5%). Spend in 2026 is forecast to reach almost $3.8 billion, up from close to $3.1 billion this year.
Accounting for an even smaller portion of total radio advertising in the US, satellite radio’s compound annual growth rate for the period of 2021-2026 is estimated to be 4.5%, reaching $236 million, up from $219 million this year.
Out-of-Home Advertising
Out-of-home (OOH) advertising was one of the hardest-hit markets in 2020, but has since recovered quickly, with the Out of Home Advertising Association of America (OAAA) recently reporting the fourth consecutive quarter of year-over-year increases of at least 37%.
While a full recovery will not be immediate — PwC estimates ad revenues will increase to $9.8 billion in 2022, trailing 2019’s $10.2 billion — by 2026 spend is estimated to reach $10.99 billion (2021-2026 CAGR of 5.14%).
OOH is expected to overtake consumer magazine advertising this year and newspaper advertising in 2024.
Digital OOH maintains its status as the faster-rising segment, with its share of total OOH advertising increasing each year. Digital OOH’s forecast compound annual growth rate for the period of 2021-2026 is 8.6%. In 2022, it will account for almost $4 billion of total OOH advertising (36.6% share) and is expected to grow to $4.6 billion by 2026 (41.7% share), though that 2026 total represents a more bearish forecast than issued last year. Comparatively, physical OOH has a 3.05% CAGR for the same period and will account for $6.4 billion in spend by 2026, also down from last year’s forecast.
Newspaper Advertising
The pandemic was not kind to newspaper advertising, but also did not precipitate as much of a decline as experienced in some other sectors, such as out-of-home and cinema. However, unlike other media, newspaper advertising did not rebound last year even after its COVID-induced drop, with its $12.041 billion total being ever so slightly down from 2020’s $12.047 billion. This year newspaper advertising spending is expected to fall again, to $11.2 billion, with a -3.86% 2021-2026 CAGR eventually leading to less than $10 billion in ad revenues for this sector by 2026.
Estimates show print advertising retaining the majority share of ad revenues in 2022 at $6.4 billion (down from $7.3 billion in 2021) but forecasts that the print market will drop to $4.9 billion in 2026, making the compound annual rate from 2021 to 2026 a feeble -7.7%. Digital, on the other hand, will see very muted growth during the same period, with 2022 ad spend expected to total $4.8 billion, rising to $5 billion in 2026 (5-year CAGR 1.04%).
These latest figures show digital newspaper advertising overtaking print newspaper advertising in 2026. PwC says the US will “make history” by being one of the world’s first major markets where this will occur.
Meanwhile, another revenue stream for newspapers is circulation, where newspapers have been “increasingly successful in building digital subscription bases and implementing paywalls achieving the scale to reach the tipping point of balancing the long-term print circulation decline.”
As such, while revenue from print newspaper circulation continues to decrease (CAGR -2.1%), digital circulation shows promise (CAGR 6.73%), with revenues rising from about $2.35 billion this year to $3.05 billion in 2026.
Magazine Advertising
There are two types of magazine advertising: consumer magazines and trade magazines. These are contained in different sections of the report, with trade magazines covered in the B2B portion.
With regards to consumer magazines, as with newspapers the ad market did not recover from pandemic-induced losses last year, with the $8.98 billion total being down from $9.8 billion in 2020. Indeed, the consumer magazine advertising market is falling at a faster rate than the newspaper advertising market.
In 2022, the consumer magazine ad market in the US is estimated to be worth $8.5 billion. However, this figure is expected to drop to $6.9 billion in 2026, resulting in a 5-year compound annual decline of -5.15%.
With a projected 2021-2026 5-year CAGR of 2.87%, digital consumer magazine ad revenue is expected to grow from $3.45 billion this year to $3.89 billion in 2026. Unlike last year’s estimates, which put digital already ahead of print, this year’s forecast predicts that digital will surpass print ad spend for consumer magazines in 2025. Indeed, print ad revenue is forecast to drop from $5.1 billion this year to $3 billion in 2026, with a 2021-2026 CAGR of -11.7%.
Much like in the past couple of years, the digital side of trade magazine ad revenue will help to make up for print’s losses. Having surpassed print advertising revenues in 2020, digital ad spend in B2B trade magazines is expected to be almost $2.2 billion this year, compared to print’s $1.5 billion. And while digital has a projected 2021-2026 CAGR of 4.6%, print will see a CAGR of -3.2%.
Overall the trade magazine ad market is forecast to have a CAGR of 1.48%.
Digital Music Streaming Advertising
Data from the Recording Industry Association of America (RIAA) reveals that digital music streaming accounted for 83% of total US recorded music industry revenues last year. And, with listeners apparently open to ad-supported services, this could explain why the digital music streaming ad market did not recede during the pandemic, but rather grew.
Last year, this ad market continued its growth, with an impressive 39.6% year-over-year increase. Digital music streaming ad revenue is set to see solid growth in the coming years, increasing from a projected $2.35 billion this year to $3.17 billion in 2026 for a CAGR just under the double-digit mark (9.98%).
Podcast Advertising
Podcast listening is growing in the US, drawing an appealing audience for advertisers. Alongside that, advertisers are pouring more money into the medium, with delivery mechanisms showing dramatic shifts.
Amid this context, PwC calls for rapid growth in podcast advertising, with this market poised to grow by 15% this year following 20% growth last year. In fact, the 2021-2026 forecast CAGR for podcast advertising is one of the highest of any market covered in this article, at 11.75%. By 2026, PwC estimates that this will be a $1.82 billion market, having by then overtaken the video game advertising market.
Video Game Advertising
Video game playing continues to expand in popularity, and is eating into more of Americans’ screen-based leisure time.
Much like with other digital ad types, video game advertising made it through 2020 relatively unscathed by the pandemic. Last year saw only minute growth for integrated video games advertising though, with just a 1.4% increase to $1.585 billion.
Things won’t get that much better in the next few years, as PwC predicts a 2.21% CAGR from 2021-2026, with the market reaching close to $1.77 billion at the end of the forecast period.
It’s worth noting that video game advertising represents only a tiny portion of the video game industry, which clocked in at $51.685 billion last year and is expected to rise at a 8.6% CAGR to close to $78.1 billion by 2026. In other words, during the forecast period, the overall video game market (excluding esports) will surpass the TV advertising market in size.
Cinema Advertising
No ad market was more negatively impacted by the pandemic than cinema. Advertising revenues plummeted by almost 80% in 2020, and despite some recovery last year (+83%) and a strong forecast CAGR of 11.7%, this market is expected to end the forecast period in 2026 at less than two-thirds of its 2019 size ($649 million versus $1 billion).
Box office takings are expected to fare much better. Research has shown a rebound last year, and by next year box office takings are predicted to surpass 2019 levels ($10.79 and $10.66 billion, respectively). With a 2021-2026 forecast CAGR of 21.1%, US box office revenues are forecast to end 2026 at more than $11.1 billion.
For more on US media audiences, make sure to check out the 8th edition of MarketingCharts’ US Media Audience Demographics report.
source: marketingcharts.com