Ad revenue's growth streak continues, but a few clouds loom, report says

Dive Brief:

Global advertising revenue is projected to grow 5% in 2019 to $600 billion, according to the summer 2019 update of Magna Advertising Forecasts that was shared with Marketing Dive. Based on strength in the first half of 2019, Magna increased its forecast for 2019 advertising growth from 4.7%.
Digital ad sales will grow 14% in 2019, down from last year's 19% growth as the space matures, to reach $304 billion, or 51% of global ad revenue. This is the first time that digital ad sales will represent more than half of global ad sales. This growth is now expected earlier than Magna's previous predictions, which estimated that digital ad growth would slow to 13%, in 2019 and that the industry would have to wait until 2020 before digital would command more than half of ad sales.
U.S. ad sales are expected to grow by 3% in 2019, reaching an all-time high of $220 billion. Digital will rise 13% to $126 billion and account for 57% of total ad sales. Non-digital ad sales are predicted to drop 3% to $290 billion, as digital takes over. Advertising growth is forecast to retract in the second half due to the expected economic slowdown.

Dive Insight:

While the Magna report paints a mostly rosy picture for advertising sales, it also calls out a few areas of potential weakness in the year ahead, such as an expected economic slowdown in the second half and the expectation that ad spends will decrease across several verticals: automotive, movie studios, personal care and retail. The report also revealed that digital advertising usage volume and pricing slowed in Q1 2019, based on numbers shared by Google and Facebook.

Magna attributes the 2019 ad growth to a stronger-than-expected global economic environment in markets including the U.S. and China, which led most industries and brands to increase their marketing and advertising spend. Retail, automotive, finance, personal care and technology remained the largest advertising verticals. Magna expects technology, telecoms, travel, finance, personal care to expand advertising spending in 2019, but expects retail and automotive to remain steady or drop slightly depending on the market.

The Magna report predicts digital advertising to become the dominant force in 2019, even as its growth slows pace. The drop from 19% growth to 14% growth was anticipated as digital media penetration becomes universal in many markets. However, the market continues to see double-digital growth and search is expected to grow by 13% this year, social by 23% and digital video by 22%.

Mobile ad impressions and clicks will be responsible for the majority of digital advertising growth. The report found that mobile ad sales will grow by 24% in 2019, which would represent 68% of total digital advertising.

A separate forecast by WPP’s GroupM has a more conservative take on ad sales growth. The company is forecasting a growth of 3.4% in 2019. The firm predicts that digital ad sales won't surpass traditional channels until 2020, when political advertising in the U.S. will cause ad spending to rise by 4.7%, the report predicts.