GroupM updates ad revenue growth predictions

Following sustained market growth in the first half of the year, GroupM has posted a revised version of its ‘This Year Next Year’ report, a global forecast for 2021 and beyond.

In a statement, GroupM said that at the halfway point of the year, advertising growth is ‘far exceeding previous expectations”, with some of the same factors contributing to growth prior to the pandemic, and also COVID itself now acting as an accelerant.

These contributing factors include “faster expansions of app ecosystems, rapid small business formation activities and the growing role of cross-border media marketplaces, especially involving manufacturers based in China”.

The report also highlights the four areas that were considered in extra detail at the halfway point of the year:
– “Digital advertising is now forecast to see 26% growth for all forms of pure-play digital media versus 15% at the time of our December update.
– Television advertising is now expected to grow by 9.3% in 2021, an improvement from our prior 7.8% expectation.
– Audio advertising were raised significantly in this update, with a forecast now at 18% growth rather than December’s 8.7% level.
– Out-of-home advertising should fare well, growing by 19% in 2021.”

Commenting on the local implications of this report, GroupM Australia head of investment intelligence, Liesa Newland said: “As the midpoint of 2021 approaches, the overall view is one of optimism.”

“Most of the improvement in growth driving this result belongs to digital media. The notable trends are the expansion of the Digital Endemics building businesses around the app and mobile gaming ecosystem and widespread business transformation initiatives, such as those experienced in the Restaurant & Alcohol Home Delivery categories. The increasing consumer adoption of e-commerce is a key factor in the predicted growth projections. In addition to traditional retailers’ e-commerce operations gearing up against the pure-plays, entrepreneurial SMBs are also building new ventures with their foundation in digital. These factors are tangibly causing acceleration in digital media spend (~20+%).”

 Liesa Newland

As stated above, digital advertising is forecasted to show the most significant growth for all channels.

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Investment in Television is also expected to return to 2019 levels, as marketers rely on the medium to build the brand and strengthen engagement.

“TV network owners are prioritising investments in content delivered on streaming services resulting in faster double digit growth in Connected TV+ advertising,” continued Newland.

Newland also remarked that the pandemic has driven long term changes to consumer behaviours and preferences, speeding up innovation in several sectors.

“Businesses have been quick to transform as customers soak up the digital ecosystem, particularly in key categories including Home Furnishing, In-Home Entertainment, Technology (including BioTech), Insurance, Government, Banking Technology, Healthcare, Retail, QSR and Luxury.”

The increasing adoption of streaming environments to view content has also given marketers the opportunity to apply “addressable advertising concepts to television”, and with the growth of video, clients are also “focussed on unifying screens and how to use all assets across multiple environments, including in social and native, to drive consumption”, said Newland.

In summary, GroupM expects growth of 19% for global advertising by the end of 2021, an increase on the December estimate of 12%. This is also 15% higher than ad revenue reported in 2019. GroupM also expects global advertising, including US political, exceeding $1 trillion in 2026, up from $641 in 2020 and $522 in 2016.

The report also highlighted a growing concentration of ownership within the industry which has increased over recent years, with the top 25 media companies representing 67% of total advertising revenue in 2020, as opposed to 42% in 2016.

The top five sellers of advertising in 2020, Google, Facebook, Alibaba, Amazon and Bytedance generated a combined $296 billion in ad revenue, which makes up 46% of the global total. In 2010, the top five generated only 17% of the global total that year.

If GroupM’s forecast is correct, the UK, Brazil, Chinese and Indian markets will all see growth of greater than 20%, with Canada and the US markets both expected to grow at percentages in the high teens, similarly to Australia’s 18% listed above.


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