What you need to know:

• Ad market set to grow 2.6 per cent (CAGR) to $19.6bn by 2025.
• Out of home and internet advertising (which includes BVOD, digital news media and digital radio assets) the only two media sectors in PwC's 2025 forecast to rise.
• Consumer advertising attention measurement and retailer media on PwC's watch list.
• Internet advertising to lift its advertising marketshare from 53.9 per cent in 2019 to 62.4 per cent in 2024.
• Linear TV ad share share falls to 17.3 per cent in 2024 from 20.8 per cent in 2019.   

Two horses

Only two media advertising sectors will show positive growth by 2024 according to PwC’s latest Media & Entertainment Outlook but the firm stopped short of predicting the global interest in applying quality consumer advertising attention levels to different advertising channels would alter its mid-range growth forecasts for different media.

PwC said there were no material structural shifts in media advertising resulting from Covid but existing trends had accelerated. More media companies would go to consumers with subscription and ad-free content models. 

Unsurprisingly, internet advertising – which includes broadcast video on demand (BVOD) and digital news media mastheads – is set to continue its land-grab for advertising marketshare, increasing from 53.9 per cent of the total ad market in 2019 to 62.4 per cent in 2024. The out of home sector is the only other media sector set to increase its advertising share, up slightly from 7.6 per cent in 2019 to 7.9 per cent in 2024. 

Outgoing PwC Partner and Outlook Editor, Justin Papps, also pointed to the rapid arrival and growth of retailer media as a sector PwC would be tracking in the next two years.

“There is no doubt that it is growing in significance and revenue,” Papps told Mi3. “The question that we look at and are continuing to look at is where is the money coming from? Is it coming from advertising dollars, trade dollars or is it incremental? We need to get a really clear understanding of that before we layer that back into this report. What is clear, though, is that this is something quite significant in so much as we're seeing more and more advertisers looking to do, or product owners looking to do, direct deals with the retailers.”

PwC’s broader analysis of the ad market sees linear TV advertising decline in marketshare from 20.8 per cent in 2019 to 17.3 per cent in 2024; printed newspapers would more than half its share from 6.9 per cent to 3 per cent; and broadcast radio would drop from 1.7 per cent to 1.1 per cent – although like TV and news media, radio’s advertising base is increasingly moving online and captured within PwC’s Internet advertising figures.   

PwC was careful about whether the TV sector’s fast-growing BVOD services would offset the declines in linear TV, putting the onus firmly on how the TV industry’s new VOZ audience measurement system across all screens will impact advertiser investment allocations. PwC forecasts BVOD will grow 32.7 per cent (CAGR) to 2025. 

“VOZ is going to help us answer that to a degree,” says Papps. “But in the short term, I think BVOD is performing better than we expected it would. And I think it is closing those jaws. Will BVOD completely close them and replace [linear TV ad revenues]? I think that is yet to be seen. And I think this is the value of VOZ, assuming that VOZ  delivers what it says it can do. The networks will be able to talk to about incremental audience reach versus substitution.”

Equally, Papps squared back to VOZ when asked if linear TV broadcasters could continue to sustain advertising rate inflation against declining audiences. “I don't want to put it all back on VOZ, but I think that data will help answer that question for us and that will help us understand quality of audience and incremental reach versus duplicated audiences and so-on," he suggested.

PwC also signalled performance media and advertising – in contrast to brand building ad strategies – would rise in priority for advertisers in the short-term. 

Attention metrics and quality shift

The impact of emerging metrics that benchmark which media channels and platforms attract higher, or lower, levels of active and passive consumer attention towards advertising is making “good progress”.  But Papps thinks it is still too early to say whether these will ultimately affect PwC’s growth and marketshare forecasts for different sectors. He said the same of incoming impacts from regulatory and privacy changes.

“The real opportunity here is that the conversation is moving to quality,” said Papps. “And I think that's that's an important advance for the industry. Whether it's an attention metric or whether it's a quality metric, I think all of those things will actually help move the conversation forward.

“We would need to get greater certainty around the metric before we then apply it back into our forecasts, because as much as there's been good progress made on it, I think there's still a way to go before we can be sure that that's the measure. It's something that we'll probably look at in the next couple of years as far as the impact that it might have.”