Midway through 2021, advertising growth for the year is far exceeding previous expectations thanks, in no small part, to the pandemic. This has led to a major revision of our global forecast for this year and beyond.
Many of the factors causing this faster growth were in place pre-pandemic, but COVID has only served as an accelerant. These include faster than expected expansions of app ecosystems, rapid small business formation activities and the growing role of cross-border media marketplaces, especially involving manufacturers based in China.
Other changes are taking root as well. Traditional TV network owners are prioritizing investments in content delivered on streaming services. While many of them will offer some ad inventory and capture a share of total TV advertising, those gains will only offset reduced spending on the traditional form of the medium.
Consequently, we see faster growth in Connected TV+ advertising (what we previously called “digital extensions of traditional TV”) than previously forecast, but total television advertising will generally be stable or slow-growing.
In total, we expect global advertising to grow by 19% (excluding U.S. political advertising) during 2021, a significant upward revision from our December forecast. This represents a level of ad revenue that is 15% higher than 2019, as 2020 only experienced a 3.5% decline on our revised estimates. High growth should persist for the foreseeable future, too.
We now expect global advertising including U.S. political to exceed $1 trillion in 2026, up from $641 billion in 2020 and $522 billion in 2016. Of note, concentration within the industry has increased over this time: in 2020, the top 25 media companies represented 67% of total advertising revenue. That same group of companies accounted for 42% in 2016.
Looking at individual markets, several should see better than 20% growth, including the U.K., Brazil, China and India. Many others will rise by the high teens, including Canada, Australia and the U.S.
Most of the improvement in growth reflected in this update belongs to digital media. We now forecast 26% growth for all forms of pure-play digital media versus 15% at the time of our December update.
Here are some other areas considered in detail as we reach the halfway point of 2021:
- Television advertising: Television is now expected to grow by 9.3% in 2021, an improvement from our prior 7.8% expectation.
- Beyond this year, we expect low single-digit growth for the broadly defined medium, including what we call Connected TV+ (the document has a sidebar that details how we are defining Connected TV+).
- We estimate that globally Connected TV+ inventory accounted for $16 billion in media company ad revenue, up by 25% over 2020 levels. We anticipate Connected TV+ ad revenue will grow to $31 billion globally by 2026.
- TV’s unique reach advantage is set to erode at a relatively rapid pace in the near term as investments in ad-free or ad-light streaming video services—mostly U.S.-based—dominate the global industry going forward. By spending billions of dollars on content (see our sidebar on Global Streaming Video for more on this).
- Audio advertising: Expectations for audio were raised significantly in this update, with a forecast now at 18% growth rather than December’s 8.7% level.
- However, following the 2020s 27% decline, even with these revisions, we do not expect the medium to return to 2019 levels any time soon.
- OOH advertising: Outdoor advertising should fare well, growing by 19% in 2021.
- Although our 2021 forecast represents a slightly slower pace of growth than we anticipated in December 2022 expectations are now slightly higher than before.
- Longer-term, OOH is benefitting from growing interest in the medium and is aided by new digital formats that allow for incremental sources of demand to emerge.