Mobile ads, music streaming to be a force in 2020: PwC

Mobile advertising revenue and music streaming activity will see dramatic increases over the next four years, as technological innovation takes hold over traditional methods of media consumption, according to a new report from PWC. The Global Entertainment and Media Outlook, released Monday, surveyed the Canadian market in several categories, including Internet and television advertisements, music and radio. And while there are increases in consumption and revenue forecast for several categories, some of the largest increases will be seen in mobile ads and music streaming in 2020. “The sharpest rise in revenue … will be seen in mobile advertising,” the report noted. It expects online ad revenue to increase at a compounded annual growth rate of 23.8 per cent. Canadian advertisers spent $266 million US on mobile Internet advertising in 2015, a 40.4 per cent increase from the year prior, according to the report. The company said it expects the number of people using mobile Internet to increase from 64.4 per cent in 2015 to 80.4 per cent in 2020. It cited a “fast uptake of smartphones and tablets among Canadians” as reasons for the predicted increases. “This is largely a function of technology,” Anita McOuat, partner in PWC’s entertainment and media group, said in a phone interview. “Everybody has been working toward ads and has been driving targeted ad campaigns on a desktop format. But given that we often access the web on a phone, and you can see those numbers are going higher, it was about the technology catching up and how to have targeted ads on our phones.” Mobile, in this manner, “beats every desktop Internet sub-component,” the report said, suggesting that given a combination of growth room for smartphone adoption and PCs still being used for Internet usage, “mobile’s share will remain small in proportion to the overall ad market.” Mobile also faces “lower conversion rates” on mobile ads, which means “desktop will continue to be the most important element in digital marketing strategies,” the report concluded. The company ranks Canada as the seventh-largest desktop paid search market in the world, with total Internet advertising in Canada expected to rise to $6.17 billion US in 2020 from $3.88 billion in 2015. The numbers follow a Cisco Systems Inc. report in February that suggested mobile data traffic will increase six times in North America by 2020. Another Cisco report, from June, pointed to an increase in personal devices and Internet of Things (IoT) devices as influential in the growth of Internet traffic in Canada. Music streaming is also expected to take a large piece of the music market by 2020. While PWC noted that streaming only commanded 18 per cent of the music market last year, that is forecast to balloon to 56 per cent in four years. The report noted that Napster, which entered the market in November 2015 and launched a $10-per-month service, is emerging as a competitor to Spotify AB, which has a similar model. “It’s only been a year or two since we (Canada) had the major streaming players, but it’s definitely very popular, particularly with a younger demographic who is used to having access to a library of music at a low cost,” McOuat said. McOuat added that the industry has now been disrupted twice in the last decade, first when physical music was replaced with digital downloads and now with digital downloads being replaced with streaming. But not all media markets are lying on a bed of roses. As has been the case, the gloomy news falls on traditional publishing. The report expects a “continuation of pronounced and consistent contraction, as advertisers and consumers disconnect from proprietors’ newsprint products.” The report also highlights over-the-top (OTT) video services as having an impact on traditional subscription TV, with costumers “cancelling part of their subs to supplement more basic channel packages with OTT video services.” TV subs are expected to dip to 70.7 per cent in 2020 from 73.5 per cent in 2015. On the flip side, IPTV subscriptions are looking at the highest growth rate, with an annual compounded rate of 6.3 per cent to 2.3 million. PWC chalked up some of this to Canada’s leading telecommunication providers adopting IPTV as a “defensive strategy to stem the loss of residential telephone subs to cable.” BCE Inc.’s IPTV platform subscriptions have grown 73 per cent to 1.1 million, according to the report, and Bell TV subscribers reached 2.7 million by the end of September 2015, edging Shaw Communications Inc. by a smidge, which had 2.69 million. PwC also said that the CRTC’s decision to ban simultaneous substitution for the National Football League (NFL)’s Super Bowl “could have a detrimental impact on TV advertising revenue in 2017,” taking into account the roughly 9.2 million people who watched the Super Bowl in Canada in 2015 and the $4.5-million US charged per 30-second spot. McOuat said the takeaway for media companies is that there are opportunities available. “Countries with high under-35 populations…have the highest entertainment and media spend, and it’s the fastest growing,” she said. — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Mobile ads, music streaming to be a force in 2020: PwC

Broadcast | June 22, 2016

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us

Mobile ads, music streaming to be a force in 2020: PwC

Broadcast | June 22, 2016

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Related Stories

Tories dissent Heritage Committee report on tech giants’ intimidation

Quebecor acquires advertising business, expands ad reach in Canada

Federal arbitrator releases paid time political broadcast schedule

Stingray, Rogers bolstering FAST channel options

Reuse & Permissions

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us