GroupM has released its global media and advertising forecast – This Year Next Year.
The forecast examines the socioeconomic factors – from China’s zero-COVID policies, the war in Ukraine, supply chain issues and inflation – contributing to the state of the economy and advertising revenues today and for the foreseeable future.
The forecast noted four key reasons GroupM is optimistic about the market and advertising:
1. Large declines appear limited to select channels in select markets.
2. Large advertisers are seeing revenue gains despite voicing caution.
3. Unemployment remains low and new business creation remains a source of growth.
4. Digital media continues to grow
Australian Market Stats:
The report found Australia’s total market growth for 2022 reached 10.9%, reaching $14.5billion. Looking ahead to 2023, the total market growth is expected to be 3.4%.
GroupM’s forecast found television’s earlier predicted 2022 growth of 4.8% year-on-year has been revised back to 3.7%. It noted that next year will be a watershed moment for Television, with the possibility of a decline in Television revenues of -0.2% year-on-year in 2023.
For 2023 and onwards, GroupM forecast that Linear TV will be in decline each year. TV has diversified and growth will now come exclusively from Video On Demand.
Meanwhile, digital commerce will return to double digit growth in 2023 at 10%. This is already evident in States such as Western Australia. New South Wales and Victoria.
The overall forecast and numerical highlights from GroupM include.
• 2022: Global advertising is expected to grow by 6.5%, ex-political advertising. This is lower than our June forecast of 8.4%, primarily as a result of lowered China expectations. Ex-China, growth is forecast at 8.1% for 2022.
• 2023: Global advertising expected to grow 5.9%, with strong gains in connected TV, retail media and fast-growing markets like India, a slight downgrade from the 6.4% estimate GroupM shared in June
• The difference between our current estimates and the June forecast can primarily be explained by changed expectations for China, which has gone from 3.3% growth to 0.6% decline, and for the U.S., where GroupM now predict 7.1% growth (ex-political advertising) versus 10.1% in June.
• These two markets will make up 55.5% of all advertising revenue in 2022.
• By 2025, all pay TV providers combined will reach fewer than half of homes in the U.S.
• Retail media is forecast to reach $110.7 billion this year, up from our September estimate of $101 billion
• Other top 10 tracked markets:
• Australia, Brazil, France, India and Japan will grow ahead of inflation
• The U.K., U.S., Canada and Germany will grow slightly behind country-level headline inflation.
• In addition to China, only Sri Lanka, where a cost-of-living crisis persists after mass protests led to the president’s resignation in July, is expected to record a nominal decline.
The major areas considered in detail coming to the end of 2022:
• Digital advertising: GroupM now expects growth of 9.3% in 2022, lower than our June forecast of 11.5%.
• This growth comes off the back of 31.9% growth in 2021 and brings the overall share of digital advertising to 67% of the industry total this year. The report noted that share is expected to rise to 73% by 2027.
• Retail media is now estimated to reach $110.7 billion dollars in 2022, an upgrade from our September forecast of $101 billion.
• Television advertising:forecasted to grow 1.7% (excluding U.S. political advertising).
• GroupM expects growth to remain between 1%-3% over the next five years as connected TV grows double-digits, narrowly offsetting declines in linear TV in markets including much of Western Europe, the U.S., China, Malaysia, Taiwan, Singapore and most of Latin America, excluding Brazil.
• GroupM noted that it does not expect the launch of ad-supported tiers from Disney and Netflix to be a significant factor in 2022.
• OOH advertising: forecasted to grow 2.2% globally (excluding U.S. political spending), or 18.1% on an ex-China basis.
• Growth in China is projected to return in 2024, however the channel is not projected to regain pre-pandemic levels within the next five years.
• Globally, OOH will surpass 2019 levels in 2024, with some markets like Brazil, Australia, France and the U.S. already above 2019 levels in 2022.
• Digital OOH, despite making up a smaller share of the inventory in most markets, now represents 30%-40% of revenue at OOH companies like JCDecaux and Clear Channel Outdoor.
• Audio advertising:projected to grow 3.8% globally in 2022 (excluding U.S. political advertising) and decelerate to 1.3% growth in 2023.
• Digital audio now represents nearly a quarter of total audio advertising revenue and is forecast to grow by double-digits in both 2022 and 2023.
• Political advertising:In 2022, U.S. political advertising will add $12.6 billion dollars to the overall industry ($13.6 billion including direct mail).
• This total, for a mid-term year, is only $500 million or so behind the figure for the 2020 presidential election year, and up an astonishing 90% over the previous mid-term elections in 2018.