The outlook for digital audio advertising continues to strengthen according to ad giant Magna. It has released an updated forecast for 2021 advertising revenue, and it now projects digital audio and podcast advertising will grow 17% this year as consumption and usage continues to increase rapidly. That is a significant jump from the 7.5% growth rate Magna forecast at the end of March.
But it is not just digital audio that is improving. Magna also forecasts U.S. broadcast radio revenue will increase seven percent this year excluding the impact of political advertising thanks to automotive and entertainment verticals, up from an earlier 2.1% projection. Print is the only traditional media not expected to see growth in 2021.
Economic recovery will lift all boats, says Magna. But it also says the contrast has never been wider between digital advertising – which is expected to gain 20% worldwide – and traditional media – estimated to have just three percent growth this year.
“COVID may be receding in most markets but the changes to lifestyles, media consumption and business models continue to fuel an acceleration in the adoption of digital marketing from both national consumer brands and small, local and ‘direct’ businesses,” it said. “Digital growth from consumer brands comes partly at the expense of traditional linear channels but in the case of small businesses (that represent the bulk of search and social ad spend), it is mostly incremental to the advertising pie.”
Overall, Magna projects U.S. media companies will take in a record $259 billion in ad revenue in 2021. That would be a 15% increase compared to 2020. The new growth forecast represents the strongest acceleration in 40 years and is nine points higher than the March estimate. The upward revision comes from a better-than-expected start of the year and an increasingly strong economic outlook for the coming months. “Marketing activity and advertising spending will be fueled by strong consumption, a fast-recovering job market, the reopening of many businesses and the return of normal events and sports schedules, plus the Olympics,” it said.
Magna forecasts total digital revenue to grow 25% compared to a more modest growth rate of four percent for traditional media excluding the impact of political ad spending. “Unlike linear media, the digital market quickly rebounded from its lows in the second quarter of 2020, and it has been red hot ever since,” said Magna, estimating digital will approach 70% of total ad sales this year.
Looking further out, Magna estimates the total U.S. ad market will grow an additional eight percent in 2022. That is a two-point improvement from its March forecast. Magna credits the Winter Olympics and mid-term elections for giving next year a boost. It also notes that marketing and advertising activity will also benefit from a full year of an open economy compared to 2021, when the first quarter was still partly hampered by COVID.
For digital audio, which includes both streaming and podcasting, Magna is forecasting eight percent growth in 2022.
MoffettNathanson’s Raises Outlook Too
Magna does not have the only team of analysts seeing improvements in the advertising economy. Separately, MoffettNathanson has also raised its outlook for the ad market this year. It now projects overall U.S. ad growth will be 19% compared to its prior 15% forecast. The Wall Street firm credits “stronger than anticipated” digital advertising results. MoffettNathanson estimates digital ad spending will grow by a third this year versus just one percent for radio, three percent for outdoor and five percent for television.
“Given digital’s robust growth, we estimate online advertising will account for 73% of U.S. ad spending by 2025, up from a 52% share today,” it said in a report.