PwC has released its latest annual Global Entertainment & Media Outlook report, a comprehensive study that contains projections for online and offline media advertising markets through 2025.
[Editor’s note: If you’re interested in media trends, the 7th 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 a tumultuous year, which saw all but a few advertising markets – notably internet, digital music streaming, video games and podcasts advertising – see their value decrease, most will start to see some signs of recovery. Here’s a look at some of the highlights for major media markets covered by PwC, ordered by forecast size in 2025, and specific to the US.
The divide between online advertising and TV advertising continues to widen. Updated estimates for 2020’s online advertising spend puts it at $139.8 billion, some $73.3 billion higher than the spend on television ($66.5 billion). This year, PwC forecasts that online advertising spending will jump to $153.2 billion — making the spend more than double that of TV, which is supposed to recover somewhat from a dip last year.
The latest estimates predict a 7.4% compound annual growth rate (CAGR) from 2020 through to 2025, at which time the online advertising market in the US is expected to reach $200.3 billion. By 2025, the dollar spend on online advertising is forecast to be nearly 2.5 times that of TV advertising spend.
In 2021, mobile is expected to account for 70% of total US online ad spend. That share is expected to grow to 74% by 2025, when mobile advertising is estimated to reach a size of $147.2 billion. For the forecast period, mobile will have a CAGR of 8.6%.
Taking a closer look at mobile advertising, paid search is expected to account for the largest portion of spend this year ($44.3 billion), followed by other display advertising, excluding video ($44.1 billion) and mobile video advertising ($19.5 billion). These rankings are expected to maintain the same order in 2025. However, while paid search will see the fastest CAGR (9.1%) from 2020 through 2025, mobile video advertising is close behind (8.9%), followed by other display (7.9%).
Unlike last year, which saw PwC estimating a decline in non-mobile internet advertising (termed “wired” by PwC), the newest estimates show a 25.4% increase (4.7% CAGR) between 2020 and 2025, when the market size will be $53.1 billion.
Indeed, within non-mobile, all but two categories are predicted to increase. The exceptions are other display advertising (-7.6% CAGR) and paid search (-0.5% CAGR). By contrast, classified advertising is expected to grow at a CAGR of 5.4% between 2020 and 2025, while non-mobile display (8.5% CAGR) and non-mobile video advertising (19.5% CAGR) are expected to see even greater growth during the period.
A new category to PwC’s analysis is connected-TV (CTV) advertising. Integral Ad Science found that some 91% of CTV users in the US watch some form of ad-supported streaming video content. Additionally, other research has found that ads on this form of media have a positive impact on viewers’ buying decisions.
In 2021, CTV in-stream video internet advertising is expected to reach $9.5 billion. Although it accounts for a minute share of total internet advertising, its value is expected to continue to grow, reaching $16.9 billion by 2025 for a CAGR of 12.8%.
Although TV consumption rose during the pandemic, the US TV advertising market fell to $66.5 billion in 2020, a loss of 9% over 2019. PwC explains the apparent discrepancy by saying that “advertising revenues tend to follow overall economic trends, rather than audience viewing trends.”
PwC estimates that the US TV advertising market will start to recover, reaching $72.3 billion in 2021 and exceeding the $73.1 billion seen in 2019 by 2022 ($76.5 billion). The gains are expected to continue in the coming years, with its market size reaching $81.2 billion by 2025 — putting the 2020 to 2025 CAGR at 4.1%. This is in contrast to eMarketer, which believes that US TV ad spend has peaked.
Although the share of households with both pay-TV and subscription streaming services is on the rise, the shift towards subscription streaming services is a threat, with The Trade Desk showing that close to 3 in 10 US households intend to cut the cord this year.
Despite this, PwC reports that large linear events such as the Super Bowl and rescheduled 2021 Olympic Games in Tokyo still hold the appeal of advertisers as “these big-scale events are still one of the only options available to customer-facing companies wanting to reach true mass audiences.”
Although online TV advertising still only accounts for a comparatively small share of total TV advertising spend, the steep rise in those who are watching ad-supported streaming video services will help with the lift in ad revenues in this market over the next few years. Spend on online TV advertising in 2021 is expected to reach $7.7 billion, rising to $10.0 billion by 2025 (11.5% CAGR from 2020).
Broadcast TV advertising’s overall growth is expected to be modest – with a CAGR of 1.9% for the period of 2020-2025, while multichannel systems advertising is expected to remain flat (0.5% CAGR).
Much like the other markets analyzed, radio advertising was not immune to the effects of the pandemic. Total ad spend on radio dropped from $18.4 billion in 2019 to $15.7 billion in 2020. [Note: Radio figures also include advertising in Canada.]
Recovery will not be as quick as originally expected, with ad spend in 2021 estimated to reach $17.7 billion, rising to $18.8 billion by 2025. As such the CAGR from 2020 to 2025 is expected to be 3.7%.
Traditional broadcasting still makes up the largest share of radio spend and is expected to remain that way through 2025. Spend on traditional radio in 2021 is forecasted to reach $14.7 billion and will 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 (7.5%). Spend in 2025 is forecast to reach $3.5 billion, up from $2.8 billion in 2021.
Accounting for an even smaller portion of total radio advertising in the US, satellite radio’s compound annual growth rate for the period of 2020-2025 is estimated to be 9.1%, reaching $235 million, up from $190 million in 2021.
As one of the hardest-hit markets last year, out-of-home (OOH) advertising saw revenues plummet 32% year-over-year (y-o-y) in 2020 to $6.9 billion, compared to $10.2 billion in 2019.
While a full recovery will not be immediate — PwC estimates ad revenues will increase to $8.4 billion in 2021 — by 2025 spend is estimated to reach $12.1 billion (CAGR 11.7%). By that time, OOH is expected to have overtaken both newspaper ($11.9 billion) and consumer magazine ($11.6 billion) advertising.
Digital OOH maintains its status as the OOH segment to keep an eye on, with its share of total OOH advertising increasing each year. Digital OOH’s forecast compound annual growth rate for the period of 2020-2025 is 15.3%. In 2021, it will account for $3 billion of total OOH advertising and is expected to grow to $4.9 billion by 2025. Comparatively, physical OOH has a 9.6% CAGR for the same period and will account for $7.1 billion in spend by 2025.
The events of 2020 did nothing to deter the downward spiral in newspaper advertising. As a whole, newspaper advertising is projected to drop from $13.6 billion in 2021 to $11.9 billion in 2025. The 5-year CAGR to 2025 is -2.0%.
Estimates show print advertising retaining the majority share of ad revenues in 2021 at $8 billion (up from $7.6 billion in 2020) but forecasts that the print market will drop to $6 billion in 2025, making the compound annual rate from 2020 to 2025 -4.6%. Digital, on the other hand, will see modest growth during the same period, with 2021 ad spend expected to total $5.6 billion and rise to $5.9 billion in 2025 (5-year CAGR 1.2%).
It is worth noting that last year’s estimates showed digital gaining the majority share of total newspaper advertising ad spend by 2023. However, these latest figures show print newspaper advertising retaining the majority share of total newspaper advertising at least through 2025.
Another revenue stream for newspapers is circulation. Major national newspapers such as The New York Times and The Wall Street Journal have benefited from an increase in digital subscriptions, per PwC. And, while revenue from print newspaper circulation continues to decrease (CAGR -1.5%), digital circulation shows promise (CAGR 6.3%) with revenues rising from about $1 billion in 2021 to $1.3 billion in 2025.
The magazine advertising market is composed of two main segments: consumer magazines and trade magazines.
In 2021, the consumer magazine ad market in the US is estimated to be worth $12.7 billion. However, this figure is expected to drop to $11.6 billion in 2025, resulting in a 5-year compound annual decline of 2.8%.
With a projected 5-year CAGR of 3.1%, digital consumer magazine ad revenue is expected to grow from $6.8 billion in 2021 to $7.9 billion in 2025. Although digital officially surpassed print ad spend last year, the gap widened this year by close to $1 billion. Indeed, print ad revenue is forecast to be $5.9 billion this year and drop to $3.7 billion by 2025, with a 2020-2025 CAGR of -10.9%.
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 last year, digital ad spend in B2B trade magazines is expected to be $1.9 billion this year, compared to print’s $1.5 billion. And while digital has a projected CAGR of 5.7%, print will see a CAGR of a mere 0.5%.
Digital Music Streaming Advertising
Data from the Recording Industry Association of America (RIAA) shows that digital music streaming accounted for 83% of total US recorded music industry revenues last year. And, with indicators showing that listeners are open to ad-supported services, this could explain why the digital music ad market did not suffer the negative impact of the pandemic that some other markets did.
In 2020, this ad market grew by 14.3% y-o-y to $1.4 billion. Digital music streaming ad revenue is set to see steady, yet modest, growth in the coming years, increasing from $1.5 billion in 2021 to $1.7 billion in 2025 (5-year CAGR of 4.6%).
Video Game Advertising
Not only did the video game industry see a gain in use last year, particularly among older adults, but it also saw spending on video games grow as well. And, much like with digital music streaming advertising, video game advertising appears to have made it through 2020 unscathed by the pandemic — with 2020 revenues remaining relatively steady from 2019 at $1.6 billion.
Also, as with digital music streaming advertising, growth will continue to be slow and steady into the future. Spend in 2021 is expected to be $1.6 billion, and by 2025 it is set to reach $1.7 billion.
It’s worth noting that video game advertising represents only a tiny part of the video game industry, which is a $35.4 billion market (excluding esports) in the US.
Advertisers are seeing the benefits of advertising during podcasts, rating podcast advertising high in brand safety, share of voice and audience engagement, as well as reaching a diverse group of listeners.
As such, the podcast advertising market is estimated to grow by 30.6% y-o-y in 2021 to reach $1.0 billion — breaching the $1 billion mark for the first time. By 2025, the US podcast advertising market is expected to hit $1.6 billion, for a CAGR of 16%.
No ad market was more negatively impacted by the pandemic than cinema. Advertising revenues plummeted some 59.1% y-o-y in 2020 to $411 million, and full recovery is not expected to occur anytime in the near future. Although the cinema advertising market is expected to see a CAGR for the period of 2020-2025 of 18.3%, ad revenues in 2025 are only expected to reach $951 million, up from $664 million in 2021.
Box office takings are not expected to fare much better. In 2020 they dropped to $2.5 billion. And, while they are expected to almost double in 2021 ($4.6 billion), they will still be less than half that of the $10.7 billion seen in 2019. By 2025, box office revenue is expected to reach $10.4 billion (CAGR 37.3%).
For more on US media audiences, make sure to check out the 7th edition of MarketingCharts’ US Media Audience Demographics report.