Once again digital media ad sales will grow at the fastest clip, climbing 15% this year and 12% next year, while traditional media ad sales (combining linear television, radio, print and out of home) will decrease by 1.5% in 2016 and by 2.2% next year. In fact, digital ad sales across all formats are on track to equal TV ad sales for the first time ever this year. Both are expected to generate about $68 billion in 2016 and digital ad sales will leapfrog ahead of TV to reach $105 billion by the end of the decade, capturing a 51% market share.
Total ad sales were strong in the first half of 2016, Magna says, up 6.1% overall when political and Olympics advertising are removed, although they faced easy comparisons to 2015’s weak first half. The growth was driven by national TV (+4.6%), digital media (+18.3%) and out of home (+3.8%). Radio sales softened in the first half, declining 2% while print posted a steeper 9% drop.
The first quarter showed the strongest year-over-year growth rate recorded in over a decade (+7.6% overall, minus political and Olympics) followed by a robust second quarter (+4.7%). “The second half is likely to show weaker growth simply because the 2015 comps will suddenly become much higher leading to a full year growth of +4.4% excluding political and Olympics,” the report says.
For full year 2016, total ad revenue growth will be almost entirely driven by digital media (+15% to $68 billion) and television (+6.9% to $68 billion) while newspapers will tumble 11% to $8 billion and radio revenue will drop 4% to $14 billion. Consolidating all traditional media categories together, Magna says TV, print, radio and out of home will decrease by -1.5% this year to $107 billion and register another 2.2% drop next year. But with traditional media increasingly expanding its reach to digital platforms, the firm says the traditional way of breaking down ad sales by media categories like TV, print and radio has become “increasingly irrelevant as media owners originally centered in those formats now deliver their content and ad loads over digital platforms and devices too.” That’s why Magna is now providing additional estimates and forecasts broken down in “holistic” media genres: video (TV plus digital video), audio (radio plus digital audio) and print (paper-based ad sales plus digital sales).
Looking at the long-term dynamic for audio for instance, it finds that while “legacy” broadcast radio ad revenues will decline at a compound average growth rate of 4% over 2016-2020, digital audio ad sales will grow by 13% and the total category will only decline by -1% per year over the period. Magna calls for legacy radio to decline 3.5% for full year 2016 but to remain flat for audio if adding digital advertising sales of radio broadcasters and pureplays, which are expected to grow 30% in 2016.
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