Canada will maintain its status as one of the world’s top 10 advertising markets through 2024, with projected growth of nearly 4% a year over the next five years, according to the latest iteration of GroupM’s This Year Next Year report.
Canadian advertising will essentially be directed towards two sources—the internet and TV—by the end of the forecast period, with the two media accounting for 80.5% of a projected $19 billion in spending. That compares with their combined 44.8% share of the market as recently as 2012.
GroupM said that Canada’s outlook reflects a global trend towards advertising deceleration, with growth slowing to 3.9% in 2020 from 5% last year.
The coronavirus, meanwhile, is a “significant wildcard” that could disrupt supply chains and negatively impact consumption of finished goods.
Digital advertising? Yep, still growing
Digital will command a 60.6% share of the total market by 2024 according to GroupM, a meteoric rise from 18.9% in 2012 (GroupM’s forecasts discount digital activity by traditional media such as TV and print).
Digital spending grew by 14% last year—compared with 12.1% in 2018—although its growth will slow throughout the forecast period, from a projected 10% this year to 7.2% by 2024.
Its growth can be linked to an economy that GroupM says is “relatively dependent” on smaller businesses, and therefore favours spending on the duopoly of Facebook and Google, whose products are “heavily oriented” towards marketers of those types.
It also benefits from the geographic dispersion of the Canadian population and what it calls a limited number of regionally specific channels. “Brands looking to reach audiences on narrower definitions of geography or audience attributes generally capitalize on the targeting capabilities of digital media,” said the report.
TV: Growth, but at a “limited pace”
TV investment grew by 1.4% last year, and is expected to attain a growth rate of between 1% and 2% during the forecast period. The medium faces “many challenges” according to GroupM, particularly as its dominant advertisers shift their incremental budgets into digital and others limited their budgets across all media.
GroupM does note, however, that the impact of TV remains “generally unparalleled” for brand-focused marketers, owing to its “unique capacity to allow marketers to borrow the brand equity of content around which their ads are run, while concurrently providing creative messaging with sight, sound and motion in a lean-back environment.”
The report also notes that new forms of “advanced TV” advertising introduced by broadcast groups like Bell Media and Corus Entertainment are driving TV growth. Corus’ audience-based buying platform Cynch now accounts for nearly 20% of its total TV revenue and more than 5% of all TV advertising in Canada, the report says, while Bell Media’s SAM system is accounting for a growing share of its ad revenue.
GroupM notes that efforts to trade addressable advertising or buying specific households on data-driven criteria remain in the early stages of development, but possess “significant potential,” particularly as fragmentation challenges the management of reach and frequency curves through conventional trading.
Out of home
Other media (which GroupM defines as everything but TV and digital) is expected to account for 26% of total advertising this year, down from 60% a decade ago and 72% 20 years ago.
The report identifies out-of-home as “a clear bright light” among the other media channels, which will continue to expand for the foreseeable future—buoyed by its ability to reach consumers in attention-grabbing environments. It also notes that the rise of programmatically delivered advertising minimizes time-consuming production barriers to entry, making it possible for greater number of advertisers to use the medium.
The report noted that the continued global health of technology and luxury brands, which are key out-of-home advertisers, continue to support the medium’s growth, with GroupM calling for year-over-year growth of around 5% over the forecast period, outpacing the industry.
Radio and print softening
The report says that radio is “disproportionately large” in Canada, with $1.5 billion in revenue last year that GroupM attributes to “relative over-exposure” among the retail and automotive categories,.
GroupM is calling for radio to contract by an average of 1% a year through the forecast period, with its total share of the overall market declining to 7.4% by 2024 (down from 12.1% in 2014).
Print’s continued decline is consistent with that of other markets, with its appeal falling to a “significant degree” among the advertisers who once favoured the medium and are now shifting to digital.
Newspaper advertising is expected to contract by 12% this year, followed by double-digit declines in each of the next two years. Newspapers’ share of the market, which stood at nearly one-third (30.4%) as recently as 2012, will be just 5% by 2024.