The global economy has weakened in 2019 and will remain similarly soft in 2020. In this environment, we predict deceleration in advertising growth at a global level despite solid growth from the US and UK. Global advertising, excluding U.S. political advertising (large enough to distort global growth rates by +/-1% each year), expanded by +5.7% in constant currency terms during 2018, capping the third year of better than +5% growth and the best year of the current economic cycle. However, 2019 appears set to grow nearly a percentage point slower at +4.8%, and growth is expected to slow by another percentage point in 2020 and 2021. We forecast +3.9% growth next year and +3.1% growth is expected to range between +3–4% through 2024. We estimate that the total global advertising market during 2020 will amount to $628 billion as we define advertising in the forecast. However, it would likely approach $700 billion on a broader definition that includes spending on direct mail and directories around the world.
Some key takeaways follow:
~ Markets whose overall economies are healthy and whose advertising economies are not may offer relative value for marketers looking to reallocate resources across countries, at least relative to those markets where overall economies are weak but advertising markets are strong. Among the markets with the widest positive gaps between economic and advertising growth forecast over the next five years are China, Switzerland, Mexico, Brazil and South Korea.
~ Digital-first brands endemic to the internet are driving much of the global advertising growth. Alibaba, Alphabet, Amazon, Booking.com, eBay, Facebook, IAC, JD.com, Netflix and Uber are each now $1 billion+ advertisers, accounting for $36 billion in spending during 2018, up by a quarter over 2017 levels; growth in 2019 is likely to be very similar.
~ Internet-related advertising is now unambiguously the most important medium globally, with $326 billion in ad revenue during 2020, up from $294 billion in 2019. Accounting for 52% of global advertising tracked here during 2020, digital is taking share of advertising in almost every country in 2019 and should do so in all of them in 2020. Digital-first brands have driven this sector’s growth. While their overall growth rates should necessarily slow as those brands mature, we see them continuing to rely on digital media to compliment brand-building activities that are often centered on TV or other offline activities.
~ Globally, we estimate that television ad revenue declined by -3.6% in 2019,excluding U.S. political advertising (or -5.5% including it). Despite the inclusion of digital extensions associated with TV in some markets (including the U.S. and U.K.) and various other advancements, TV is unlikely to grow in the future on an underlying basis, and we expect just under $170 billion in annual ad revenue each year through 2024.
~ SVOD and streaming services remain top of mind for marketers utilizing television. New streaming services will face challenges and require meaningful investments, leading to hard choices for media owners who would otherwise prefer to maintain profit levels while sustaining growth New SVOD services require high levels of investment in content, and may cannibalize revenue and consumption from existing video services (such as traditional broadcast and cable networks). This has knock-on effects for marketers who might count on television to retain its importance to consumers in years ahead, and who may only see limited ad loads from new streaming services.
~ Our updated estimates for outdoor advertising—a sector with $39 billion in global ad revenue during 2019—indicate growth slowing from +5.3% in 2018 to +1.8% this year, +2.5% in 2020, and 3–4% growth rates in most subsequent periods. Outdoor advertising is growing faster than the rest of the industry, aside from pure-play digital media.
~ Radio maintains wide reach and real impact, but growth is more modest. Radio, or more accurately “audio,” accounts for $31 billion in activity this year, and has generally been less robust than outdoor or television in recent years. We estimate that around the world, the industry declined by -1.1% in 2019 and should grow by +1.8% in 2020. Excluding the impact of political advertising in the U.S., the industry is essentially stable and should grow by 0–1% each year into the future.
Putting all of this in context, we are mindful that media is only a means to an end: marketers should be focused on optimizing the mix of external and internal resources that drive business growth. Marketers can look at the data included in our report to gain a sense of the health of their media partners now and over the next several years. However, even a media owner in decline may still be investing in new and better ways m to connect with audiences. At the same time, other media owners may be healthy in terms of revenue growth but may not necessarily be investing in everything they can to make their ad inventory more effective. More broadly, we encourage marketers to continue to view media as only a means to an end. Investments in internal marketing infrastructure, marketing technology software and external services are among the other ways to support marketing excellence. Ensuring that processes are in place to optimize the balance between those elements of marketing will be more impactful than the choice to invest or stay away from any one type of media as it grows or declines in the years ahead.