The total global advertising revenues will rise at a CAGR of 4.7% to 2019. Like consumer revenues, advertising will see digital growth and non-digital resilience: while global digital advertising revenue will rise at a 12.2% CAGR against just 1.2% for non-digital advertising, non-digital will still contribute over 60% of global ad spend in 2019.
That said, the clear direction of travel is toward digital – a fact underlined by Internet advertising`s position as the fastest-growing segment of advertising through to 2019, overtaking global broadcast TV advertising. By that year, digital advertising as a whole – including digital out-of-home – will account for 38.7% of total global advertising revenue, up from just 16.6% in 2010. A primary driver of digital advertising throughout the forecast period will be rapid rises in mobile and video Internet advertising. Mobile Internet advertising will surge at a 23.1% CAGR to 2019, overtaking display Internet advertising globally in 2018, and supplanting paid search in the US in 2016 as the leading Internet advertising category. And video advertising spend globally will rise at a CAGR of 19.5%, supported by a near-doubling of global smartphone connections to 3.85bn in 2019. In 2014 the global smartphone connections was 1.92bn.
Alongside Internet advertising, digital out-of-home advertising (DOOH) will be another high-growth area, with revenues rising at a 13.2% CAGR. Given the high costs of upgrading OOH to digital formats, the most lucrative markets for DOOH advertising will be major cities. By 2019, the city-state of Singapore will see DOOH advertising account for 60.4% of total OOH advertising revenue, while exceptional growth in London will help DOOH`s share in the UK reach 53.7%.
Global total TV advertising revenue will rise at a 4.1% CAGR to US$204.07bn in 2019. But the global total TV advertising revenue`s share of global total advertising revenue will fall from 31.5% in 2014 to 30.6% in 2019.
Brazil, China and India combined will account for 23% of growth in global total TV advertising revenue. Brazil and China`s explosive growth will consolidate their position as the third- and fourth-largest markets for total TV advertising revenue, respectively, while India will jump from 12th-largest to seventh-largest market from 2014 to 2019.
Total newspaper revenue will decline over each of the next five years, albeit at lower rates. After falling -0.9% in 2014, total newspaper revenue will continue declining to 2019, losing more than US$2bn to reach US$146.85bn. Yet these declines will become marginal from 2017 onwards, offering the industry some much-needed stability.
Circulation revenue and advertising revenue are converging due to advertising`s continued decline. Total newspaper advertising revenue has always been the greatest contributor to total newspaper revenue. Total newspaper advertising revenue has always been the greatest contributor to total newspaper revenue. However, the former`s ongoing decline means that total newspaper circulation revenue and total newspaper advertising revenue are becoming of equal value to the global newspaper industry. From 54.4% in 2010 and 52.6% in 2014, total newspaper advertising revenue will account for just 50.7% of total newspaper revenue in 2019.
Advertising will drive growth in radio revenue. The continued recovery of advertiser confidence since the economic downturn will see radio advertising revenue extend its share of global total radio revenue from 75.3% in 2014 to 75.8% in 2019.
Consumer magazine advertising will continue its transition from print to digital. With a rise of almost 20 percentage points from 2014 to 2019, global digital consumer magazine advertising revenue will account for 37.0% of global total consumer magazine advertising revenue in 2019, as tablet penetration drives the usage of digital magazines and makes magazine websites more attractive. In 2019, global digital consumer magazine advertising revenue will reach US$13.56bn, up from US$6.43bn in 2014.
Looking across all segments and territories to 2019, overall global advertising revenues – rising at a 4.7% CAGR – will outpace consumer spending at a 2.9% CAGR. This means we`re presented with the prospect of a global entertainment and media industry that`s increasingly dependent on ad revenues. Significantly, the growth differential varies widely between countries, tending to be narrower in mature` markets and wider in growth` territories. For example, consumer and advertising revenues in the US will grow at CAGRs of 2.9% and 3.5%, respectively, while in Indonesia they`ll be 5.2% and 12.9%. The industry globally will need to keep a close eye on this divergence in its revenue streams.
Consumers migrate to new media consumption behaviours
Underlying the trends in entertainment and media spending detailed in the Outlook is the migration by consumers worldwide to new ways of consuming content. One of the clearest shifts is in TV and video consumption, with consumers increasingly demanding high-quality original programming in a flexible, on-demand manner across numerous devices – thus enabling binge viewing` and greater convenience. OTT services offer the best outlet for this type of consumption, helping to explain why North American subscription TV penetration is forecast to fall from 79.8% in 2012 to 78.1% in 2016.
Newspaper consumption is also changing, with consumers increasingly willing to pay for premium content. Online paywalls are now making up for newspapers` lost print circulation revenues globally, with a wave of subscription offerings boosting newspapers` digital circulation revenues to nearly US$2.5bn in 2014. In aggregate, as digital subscription revenues gain momentum globally and print subscriptions continue to shrink, total global newspaper circulation revenue is set to record year-on-year increases – a pattern that began in 2013.
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