Magna Sees Global Ad Revs Growing 5.4%, But Radio Generally Flat
June 21, 2016 at 6:02 AM (PT)
In an updated report, MAGNA GLOBAL expects media advertising revenues will grow by +5.4% in 2016, to $480 billion, and by 3.1% in 2017. That compares with +4.8% and +3.2% in the DECEMBER 2015 forecast.
The report predicts Radio will be generally flat (-0.2% at $32 billion), and notes, "Our +5.4% prediction for global growth in 2016 is the result of digital media advertising sales growing +15% while traditional media advertising sales will be flat (+1%). The only traditional media categories to see increasing advertising sales will be television (+4.4% at $179 billion) and out-of-home media (OOH) (+3.8% at $31 billion). Radio will be flat (-0.2% at $32 billion) and print media advertising revenues will continue their long-term decline (-8% to $70 billion) caused by audience erosion. Digital media advertising sales will increase by +15% to $170 billion globally this year, driven by mobile advertising (+44%), video formats (+35%) and social formats (+43%) while search remains robust (+14%) and banner format sales in decline (-6%) due to ad blocking and the competition of other formats. Digital media advertising sales will reach $192 billion (a 39% market share) by the end of 2017, surpassing TV at $178 billion (a 36% market share) to become the number one media category globally. Mobile advertising will account for 42% of total digital advertising by the end of 2016 and will approach 50% by the end of 2017, reflecting further shifts in digital media usage by consumers and related strategies by marketers."
The report adds, "Linear radio ad sales are expected to decrease by -3.5% in 2016 to $14 billion. It will be the fourth year in a row that radio advertising sales decrease, suggesting that the medium has entered into a long-term erosion of advertising sales similar to the one experienced by print media. The decline of linear radio will be more gradual and less steep than that of print (-10% per year), but ultimately caused by similar factors: audience erosion, competition from digital media and challenged pricing power."
There's no surprise that the updated data found, "The overall reach and consumption of linear radio remain high overall, but younger targets are becoming harder to reach as they shift to digital audio streaming. Digital audio advertising revenues represented approximately $2 billion dollars in 2015, in MAGNA’s estimates, evenly split between online streaming from traditional radio players, growing by +5% with advertising revenues of “pure players” (PANDORA, SPOTIFY, etc.) growing by +40%. Aggregating linear (legacy) radio adverting sales ($14.4 billion) and digital audio advertising ($2.2 billion), MAGNA estimates that the audio advertising market was stable in 2015, at $16.6 billion. Linear talk radio and popular hosts will remain relevant for local advertisers as long as people drive automobiles, but digital audio will continue to grow much faster than linear radio, representing 25% of the audio advertising market by 2020, compared to 16% today."