GroupM is projecting Canada’s ad market will grow 5.8% this year with revenue rising by 8% in 2023, thanks to growth in retail media and connected TV.
The report – released twice annually – also forecast that global ad growth will be 6.5% this year, lower than the agency’s prediction of 8.4% in June. For 2023, global growth is projected to be 5.9% in 2023, down from the 6.4% June estimate. The decline is due to the IMF’s expectation for global inflation of 6.5%.
Digital is key to most of Canada’s ad growth. Pure-play digital advertising in Canada accounts for 72.8% of share this year and is expected to continue to grow above pre-pandemic levels in 2023. Retail media (a subset of digital) is forecast to reach more than $2.6 billion USD in 2022, declining slightly vs 2021 before growing 15.3% in 2023.
TV advertising, representing 12.9% of ad share, is predicted to grow 6.6% this year. There is continuing shift from linear to connected TV and an increase in inventory, even with the inflated cost of TV still being lower than some of the available CTV options.
Kate Scott-Dawkins, global director of business intelligence at GroupM, says that in the U.S., the agency is seeing incremental decline in linear TV offset by growth in CTV. But in markets like Canada and the U.K. where there’s a larger free-to-air TV element, it’s happening more slowly.
“Linear is actually going to grow this year by 6% and in 2023 by 3%, so it’s moderating,” Scott-Dawkins says of the Canadian market. “It’s going to keep decelerating incrementally as we go forward as more viewing time shifts to connected TV and follows from more of the content spending going to connected TV. We generally find share of viewing follows share of content spending.”
Scott-Dawkins says there’s a lot of talk about FAST channels and services globally, and these channels may open up opportunities to more advertisers in general than linear TV networks.
“For the most part, we’re watching more of a shift of dollars out of linear into connected TV rather than incremental – and we’re certainly seeing interest and revenues to FAST as part of the wider connected TV category,” she says, though adds that GroupM has not yet been seeing any “SVOD fatigue.” “As long as the content spend is there and the content is compelling consumers will still sign up for those services.”
Digital is driving growth in other media channels, such as out-of-home. In Canada, GroupM says OOH overall is still on a recovery trajectory and doesn’t anticipate recovery above 2019 levels until 2024, which is also the average globally. Digital OOH is driving the growth even though it’s a smaller percentage of the total inventory – and is becoming increasingly important to OOH providers.
Where there’s growth to be had in audio, it’s in the digital and streaming side of audio. When looking at traditional audio in Canada, GroupM doesn’t expect it to ever recover to 2019 levels. Flat growth is projected for next year and subsequent years going into a slight decline by 2027 for traditional audio. On the digital audio side, 3% growth is projected for 2023 with similar single-digit increases for the next five years.
“One of the interesting things is watching how the forecasts have changed over the last three reports from December 2021 to December 2022,” Scott-Dawkins says. “As markets contend with all the macroeconomic challenges that are happening and the continuing war in Ukraine, for this year 2022 Canada’s estimates have come down over the course of the year. What is interesting is that for 2023, estimates for Canada are down from the June estimates but actually up from the end of 2021. The overall message is that we’re not expecting deep declines into next year yet.”