OOH growth prospects bright in UK, US markets: GroupM forecasts
By Bhawana Anand - December 04, 2019
In the UK, outdoor remains a standout for its capacity to sustain growth, supported by ongoing innovation, especially in DOOH; in the US, outdoor will likely grow at +4.0 to +5.0% over each of the next five years
GroupM’s just released ‘This Year Next Year’ U.K. forecasts point out that despite all the uncertainty facing the United Kingdom in 2019, the media industry has held strong. GroupM estimates that advertising will grow by +7.8% this year, marking the sixth consecutive year of mid to- high-single-digit growth. Since 2013, the U.K.’s advertising sector has expanded by more than half, up +55% over that year’s levels, and, with that growth, the U.K. is unambiguously the fourth largest market anywhere. If recent growth trends were to persist, within five years the U.K. would possibly match Japan’s size and become the third largest.
2020 still looks strong, and GroupM forecasts +6.7% next year, to £24 billion. While recognising the aforementioned risks, the reports maintain an optimistic outlook on industry-level growth.
Digital advertising will continue to grow by double digits this year and next. Digital-first brands still rely on digital media. Traditional TV advertising will be flat in 2020 as the medium sustains tremendous value for marketers even as TV evolves during an uncertain economic period. Print will continue to be challenging but Cinema will end 2019 with robust growth.
The report states that the outdoor remains a standout for its capacity to sustain growth, supported by ongoing innovation, especially in DOOH, and its relatively unique capacity to generate, capture and sustain attention. These advantages are more apparent to many marketers, especially as traditional television continues to weaken. Digital formats are increasingly important, now accounting for half of spending on OOH, with further share gains still to come especially as more automation takes root, including the emergence of performance-based targeting and data-driven trading. After growing by close to +8.0% this year, GroupM expects +4.0 to +5.0% levels over each of the next five years.
In the case of U.S., the GroupM’s ‘This Year Next Year’ study says this market will mark a fourth consecutive year of solid mid-single-digit growth for the industry on an underlying basis. Taking out directories and direct mail makes the health of the industry look even stronger, with a +7.6% underlying growth rate for 2019, although including political advertising in all years brings growth down a few notches to +3.8% all in. However, the report states that the growth has been robust relative to the general economy, which is generally decelerating on an underlying basis.
2020 still looks solid; GroupM forecasts +4.0% growth next year. There are expectations of some softening next year as the economy reverts toward normalcy after a period of growth likely supported by factors including the 2017 domestic tax cut, an expanding federal deficit and low interest rates. As the effects of these fade, heightened trade barriers should concurrently become a drag on the overall economy. The 2020 Olympics also likely provide some marginal benefits, although it can be difficult to identify the degree to which Olympic activity captures spending that would already have occurred or if it causes incremental spending to flow into the advertising market.
Digital-first marketers are likely driving much of the industry’s recent growth. Advertising revenue to pure-play internet-based companies should grow by double digits next year to reach $127 billion in revenue, representing a 50% share of industry revenue.
“TV advertising is soft as we close 2019 and will end the year with a -7.0% decline (-2.0% excl. political), falling to $65 billion in ad revenue”, states the report. Radio is likely to be flat going forward. Print will continue to be weak, although it retains value as a niche medium
Outdoor should be the fastest growing “traditional” medium, up by +8.0% to reach $8.3 billion. Various factors have enabled the medium to grow by +8.0% this year, a level that is not likely to be sustained. “We expect more modest +4.0 to +5.0% growth levels over each of the next five years. Notably, this represents a gradual increase in the share of spending in the overall advertising economy, which presently amounts to 3.4%”, according to GroupM.