Global advertising growth is exceeding expectations as the pandemic loosens its grip on economic activity, according to media agency GroupM.
In a forecast sharply revised from December, GroupM sees global ad revenues up 19% from last year--excluding political advertising in the U.S.--and 15% higher than 2019, the pre-pandemic year.
GroupM sees global advertising, including U.S. political to surpass $1 trillion in 2025, up from $641 billion in 2020.
GroupM previously released its forecast for the U.S. market, which said total TV ad revenue was expected to be flat in post-election 2021.
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“Midway through 2021, it has become apparent that the market is growing much faster than we expected and from a larger base than we previously believed,” GroupM said in its report. “While many of these growth factors were in place before last year, the pandemic has proven to be an accelerant.”
Some of the key factors in the rapid growth include the expansion of app ecosystems, small business formation activity and the growth role of cross-border media marketplaces.
Among the markets where GroupM expects 20% growth or better are the U.K., Brazil, China and India. Canada, Australia and the U.S. are expected to have growth rates in the high teens.
GroupM has raised its forecast for digital advertising to 26% growth in 2021 versus its 15% expectation in December. The current forecast for TV is a 9.3% increase, up from 7.8% previously.
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Connected TV plus inventory will account for $16 billion in media company ad revenue, up by 25% over 2020 levels. GroupM anticipates connected TV plus ad revenue will grow to $31 billion globally by 2026.
GroupM noted that consumers will be shifting their TV viewing to streaming globally, just as has happened in the U.S.
“This is a net-negative for marketers because a growing share of that content will almost certainly remain ad-free. Advertisers will find television less useful for achieving reach and frequency—two of the critical characteristics that have long given the medium its unique power,” GroupM said. “At the same time, the upside of the wider use of streaming platforms is that there will be greater opportunities to apply addressable advertising concepts to television.”
GroupM noted that global ad revenue has become more concentrated, with the 25 largest media companies accounting for about 67% of all ad revenues, up from 42% in 2016.
The shift to streaming might accelerate that trend.
“U.S.-based legacy TV network owners, including Comcast, Disney, ViacomCBS and WarnerMedia, join Netflix, Amazon and Apple in their active development or deployment of their new offerings around the world, pairing massive video libraries with growing investments in local content,” GroupM said.
“As they do so, they will be positioned to significantly enhance their positions as sellers of content to consumers and advertising to marketers worldwide. To the extent they deploy enough capital in this endeavor, they will likely succeed. This will then have knock-on effects on further consolidation among less-well capitalized single country-focused media companies,” it said.
