GroupM has published its annual Global Media & Advertising Forecast – This Year Next Year which has found global ad spends will slow to 5.6 per cent in 2023, while Australia will be hit with a slowdown of just 3.4 per cent growth,
The report details the socioeconomic factors—from the implications of China’s zero-COVID policies to the war in Ukraine to supply chain issues to inflation and beyond—contributing to the state of the economy and advertising revenues today and for the foreseeable future. The full report is attached and below you’ll find some of the global and Australian stats.
Four key takeouts from the report include:
- Large declines appear limited to select channels in select markets.
- Large advertisers are seeing revenue gains despite voicing caution.
- Unemployment remains low and new business creation remains a source of growth.
- Digital media continues to grow
Here is the overall forecast and some numerical highlights:
- 2022: Global advertising is expected to grow by 6.5 per cent, ex-political advertising. This is lower than our June forecast of 8.4 per cent, primarily as a result of lowered China expectations. Ex-China, growth is forecast at 8.1 per cent for 2022.
- 2023: Global advertising expected to grow 5.9 per cent, with strong gains in connected TV, retail media and fast-growing markets like India, a slight downgrade from the 6.4% estimate we 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 per cent growth to 0.6 per cent decline, and for the U.S., where we now predict 7.1 per cent growth (ex-political advertising) versus 10.1 per cent in June.
- These two markets will make up 55.5 per cent 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 $US110.7 billion this year, up from our September estimate of $US101 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.
Australian market stats:
- Total Market Growth for 2022: 10.9 per cent reaching $A14.5 billion
- Total Market Growth for 2023: 3.4 per cent
- Television’s earlier predicted 2022 growth of 4.8 per cent year-on-year has been revised back to 3.7 per cent.
- Next year will be a watershed moment for Television, with the possibility of a decline in Television revenues of -0.2 per cent year-on-year in 2023
- For 2023 and onwards, we forecast that Linear TV will be in decline each year. TV has diversified and growth will now come exclusively from Video On Demand.
- Digital Commerce will return to double digit growth in 2023 at 10 per cent. This is already evident in States such as Western Australia. New South Wales and Victoria.
Here are the major areas considered in detail as we reach the end of 2022:
- Digital advertising: GroupM now expects growth of 9.3 per cent in 2022, lower than its June forecast of 11.5 per cent.
- This growth comes off the back of 31.9 per cent growth in 2021 and brings the overall share of digital advertising to 67 per cent of the industry total this year. It expects that share to rise to 73 per cent 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 per cent (excluding U.S. political advertising).
- GroupM expects growth to remain between one to three per cent 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.
- We do 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 per cent globally (excluding U.S. political spending), or 18.1 per cent 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 to 40 per cent of revenue at OOH companies like JCDecaux and Clear Channel Outdoor.
- Audio advertising: projected to grow 3.8 per cent globally in 2022 (excluding U.S. political advertising) and decelerate to 1.3 per cent 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 $US12.6 billion dollars to the overall industry ($US13.6 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 per cent over the previous mid-term elections in 2018.
