New Age Advertising Market Outlook

1. NEW-AGE ADVERTISING MARKET OUTLOOK 2022–2024 New Age advertising has been consistently driving overall ad spending globally since the past few years. The nature of advertising is gradually expected to completely transform from traditional to digital. This in turn will spur growth opportunities for several connected industries/products as well as result in the decline of some advertising mediums. Covered in this report The Global Advertising Industry – Spotlight on Digital The Global Digital Advertising Expenditure Market Audience Insights © 2022 SG Analytics Pvt. Ltd. | Not Licensed For Distribution.

2. New Age Advertising Market Outlook, 2022–2024 TABLE OF CONTENTS Overview 3 1 Introduction 3 The Current Global Economy & Correlation between Ad Spending & GDP 4 Looking Ahead – New Age (Digital) advertising to drive Global Ad Spending 5 The Global Advertising Industry – Spotlight on Digital 6 2 Digital has sustained the global advertising industry’s growth amid the onslaught of the COVID-19 pandemic 6 6 Key Growth Trends – Ad Spending by Digital vs. Traditional Mediums 8 Digital takes Center stage in Ad Spends The Global Digital Advertising Expenditure Market 9 3 Breakdown of Digital Advertising Expenditure 9 Key Market Trends and Implications as a result of the Growth of Digital 10 Current & Future Outlook – Key Takeaways 11 Audience Insights 13 4 Internet Adoption & Device Usage Statistics 13 Top Websites and Segments for Digital Advertising 15 Video – Key Trends & Takeaways 16 Social – Key Trends & Takeaways 16 Glossary 17 2 © 2022 SG Analytics Pvt. Ltd. | Not Licensed For Distribution.

3. New Age Advertising Market Outlook, 2022–2024 OVERVIEW Introduction New-age advertising (predominantly comprising digital media-based advertising) has been consistently driving overall ad spending, globally, for the past few years. This has been due to the proliferation of social, mobile, analytics, and cloud (SMAC) technologies, products, platforms, and solutions. The undeterred growth in this segment despite major global growth setbacks such as the COVID-19 pandemic has proven that moving forward, the nature of advertising will completely transform from traditional to digital. This in turn will spur growth opportunities in several connected industries/products as well as result in the decline and subsequent pushing out of certain advertising mediums and their ecosystem participants. The following sections will elaborate on some the growth trends of global advertising and how ‘digital’ is expected to take center stage over the next few years. 3 © 2022 SG Analytics Pvt. Ltd. | Not Licensed For Distribution.

4. New Age Advertising Market Outlook, 2022–2024 The Current Global Economy and Correlation between Ad Spending and GDP The COVID-19 pandemic has caused a significant dent in global growth during 2020 as indicated Figure 1 GDP at Current Prices: Global, 2017–2024 Source: International Monetary Fund (IMF) The global pandemic resulted in a decline of consumer spending and advertising spending globally during the year 2020. This, in turn, was also partly responsible for negatively impacting the GDP, which fell to USD 85.2 trillion in 2020 from USD 87.5 trillion in 2019 (Figure 1). Several industries were compelled to curb production of certain goods due to decreasing demand as well as cut costs on advertising expenditures. Figure 2 shows the growth of global advertising spending and its correlation with GDP growth. Figure 2 GDP Growth and Ad Spend: Global, 2017–2024 2020 2017 2018 2019 2021 2022 2023 2024 YoY Changes in GDP at Constant Prices -3.0% 3.7% 3.6% 2.9% 6.1% 3.6% 3.5% 3.4% YoY Change in Ad Spend -1.5% 6.5% 9.8% 8.0% 20.6% 11.0% 5.1% 8.0% Source: International Monetary Fund (IMF), GroupM 4 © 2022 SG Analytics Pvt. Ltd. | Not Licensed For Distribution.

5. New Age Advertising Market Outlook, 2022–2024 A strong correlation is observed between the real GDP growth and the ad spend globally. Ad spending is mostly planned and many a times, a cautious outlook about the economy is reflected by way of postponement of ad spending. During an economic downturn, it is generally advertising spend that is prone to curtailment. In 2020, the pandemic led to a 3.06% dip in GDP growth, resulting in a corresponding decline of 1.5% in ad spends (Figure 2). Owing to the implementation of vaccination at a large scale and other aggressive efforts to curb the pandemic, the global economy and resultant ad spending showed a tremendous recovery during 2021. Significant growth is expected in the budgeted advertising spends and GDP from 2022 onward. Looking Ahead – New-age (Digital) Advertising to Drive Global Ad Spending Within the ad spending market, digital, outdoor, and traditional TV broadcasting ads are expected to spearhead growth globally as well as contribute to a significant share of ad spending. In particular, the digital segment, majorly comprising search ads, banner ads, video ads, and classifieds, is expected to constitute a lion’s share of the market, i.e. close to 2/3rd by spending, over the next few years. Furthermore, digital was the only segment that was least affected by the pandemic. Unlike other segments that witnessed a decline, the digital segment experienced high growth in ad spends during 2019–2020. Digital is expected to continue as the primary growth engine within advertising over the next three to five years. The following section sheds light on ad spending trends by different mediums and explains the role and importance of digital advertising as well as its impact on the advertising ecosystem. 5 © 2022 SG Analytics Pvt. Ltd. | Not Licensed For Distribution.

6. New Age Advertising Market Outlook, 2022–2024 THE GLOBAL ADVERTISING INDUSTRY – SPOTLIGHT ON DIGITAL Digital Has Sustained the Global Advertising Industry’s Growth amid the COVID-19 Pandemic The advertising media landscape has undergone sweeping changes over the last decade. Rapid adoption and dominant use of digital media by advertisers has disrupted the traditional advertising ecosystem irreversibly. Historically, advertising spending used the media mix of television (broadcast, cable, and satellite), print (newspapers and magazines), radio/audio, out of home/outdoor (OOH), and internet-enabled digital media to communicate selling messages to consumers about their myriad of products and services. Owing to the recent technological changes in the media universe, the relative strength of traditional media, as measured by the percentage of total ad spend, has declined. This gap has been filled by digital media, in general, and social media (Google, Facebook, Instagram, etc.), in particular. Digital is projected to spearhead ad spending during 2022–2024, commanding over 60% market share of the total ad spend, with sub-categories such as social media, search, and video expected to be key digital drivers. Key Growth Trends – Ad Spending by Digital vs. Traditional Mediums Figure 3 shows the total global ad spending by different mediums and the resultant year-on-year percent growth from 2017 to 2024. Figure 3 Spending by Advertisement Mediums: Global, 2017–2024 Source: GroupM 6 © 2022 SG Analytics Pvt. Ltd. | Not Licensed For Distribution.

7. New Age Advertising Market Outlook, 2022–2024 The global advertising spend reached USD 765.6 billion in 2021, registering a 20.6% recovery from 2020 to 2021 as against a 1.5% dip during 2019–2020 in the wake of the pandemic. The comparatively low impact of the pandemic on the overall ad spend during 2019–2020 was due to the digital segment’s high growth rate during this period and its major share in overall ad spending. The 2021 growth metrics is expected to pave the way for sustained growth in ad expenditure over the next few years, forecasting global ad spend to reach USD 965.7 billion by the year 2024. According to Figure 3, the digital segment comprising more than 60% of the total ad spend touched USD 492.6 billion in 2021, and is expected to reach close to USD 667.0 billion by the year 2024 at a CAGR of 7.9% over the period 2021–2024. Figure 4 measures the year-on-year (Y-O-Y) growth rates by different mediums of ad spending from 2017 to 2024. Figure 4 YoY Growth in Spending by Advertisement Mediums: Global, 2017–2024 Source: GroupM The abovementioned statistics shows that digital is the only medium that witnessed growth during the period 2019–2020 as compared to all other mediums that witnessed a decline during the same period. The digital ad medium is expected to demonstrate most consistent growth during 2017–2024. The Cinema segment can be considered an outlier as it witnessed tremendous recovery of close to 132.5% in ad spend from 2021 to 2022. This segment was the most affected during the pandemic (2020–2021) due to lockdown measures. OOH advertising is another medium that was adversely affected by the pandemic in 2020 but has demonstrated significant recovery in 2021. Although not nearly as effective, pervasive, and all-reaching as the digital medium, OOH advertising has significant potential for growth over the next few years, owing to digitalization of outdoor sites and integration of programmatic advertising solutions. Two segments that are expected to consistently decline over the period 2021–2024 are newspapers and magazines. This may be partly due to the decreasing popularity of subscription models for hard copy sources as similar information is available digitally without any binding subscription agreements. 7 © 2022 SG Analytics Pvt. Ltd. | Not Licensed For Distribution.

8. New Age Advertising Market Outlook, 2022–2024 It can be inferred that the consistent rise in digital ad spending coupled with the segment’s high share of the ad spending market is expected to drive global growth in ad spending over the next few years, globally. Figure 5 highlights the percentage share of ad spending from 2017 to 2024 by segments. Figure 5 Percentage Share of Ad Spend by Mediums: Global, 2017–2024 As shown in the above figure, in spite of the adverse impact of the pandemic during 2020, the Digital medium’s percentage contribution to Global Ad Spending has been growing consistently and is expected to reach close to 69.1 percent of the total Ad spend during the timeframe mentioned. Source: GroupM Despite the adverse impact of the pandemic in 2020, the digital medium’s percentage contribution to global ad spending has been growing consistently and is expected to reach close to 69.1% of the total ad spend by the year 2024 (Figure 5). Digital Takes Center Stage in Ad Spends Taking heed of the undaunted and rapid expansion of the digital segment, it would be prudent for brands to leverage upon this medium by exploring programmatic advertising, rolling out customized offers, targeted messages, and tailor-made services that are impactful and contextual to the target audience. The primary requirement for brands’ successful digital spends would be to understand how to integrate advertising into evolving digital platforms and trends such as metaverse platforms, social media platforms, influencer marketing, and at the same time, continuously evolve and improve upon their analytics-driven decision-making activities. This will enable them to understand evolving consumer expectations and reorient brand perception suited to changing consumer values and behaviors. 8 © 2022 SG Analytics Pvt. Ltd. | Not Licensed For Distribution.

9. New Age Advertising Market Outlook, 2022–2024 THE GLOBAL DIGITAL ADVERTISING EXPENDITURE MARKET Breakdown of Digital Advertising Expenditure The global ad spending by the digital segment had reached close to USD 492.6 billion in 2021. Figure 6 provides a breakdown of the digital segment ad expenditure by key formats. Figure 6 Digital Ad Spending by Format: Global, 2021 Source: HootSuite The search ads segment contributed to the highest share of digital ad expenditure (~37% of digital ad spending), followed by banner ads (~34%) and video ads (~19%). The classifieds and others segments collectively contributed close to 10% of total digital ad spending. 9 © 2022 SG Analytics Pvt. Ltd. | Not Licensed For Distribution.

10. New Age Advertising Market Outlook, 2022–2024 Figure 7 Digital Ad Spending by Platforms: Global, 2021 Source: HootSuite Google, Meta, Alibaba, Amazon, and Tencent collectively contributed close to 70% of the global digital ad spend during the year 2021 (Figure 7). Overall, the top websites that are attractive platforms for digital advertisers are Google, YouTube, Facebook, Wikipedia, Amazon, Twitter, and Instagram. Key Market Trends and Implications As a Result of the Growth of Digital Following are some of the key current market developments due to rapid growth of digital ad spending. Traditional Media Companies Expanding Product Lines In response to the burgeoning growth of digital ad spending, mainstream printing/publishing companies have been expanding their product offerings by introducing digital solutions. An example of this is the Indian publishing company, Times Group (Bennett Coleman and Company Ltd.) that has introduced television channels, online businesses such as their subsidiary unit Times Internet (which owns MX Player), radio, and other lines of businesses to diversify revenue streams. Broadcasting Companies Exploring Digital Solutions Spending on TV advertising is expected to continue witnessing a decline in growth over the next few years, owing to consumers’ perception of high costs involved in TV streaming services and increasing preferences for digital device viewing. This in turn is also pushing traditional broadcasters to foray into offering digital solutions to diversify and explore new revenue streams. Small Companies Focus Mainly on Digital Advertising Large-scale organizations with access to high capital are likely to allocate advertising budgets across multiple mediums whereas small-scale companies that conduct most of their businesses online are more likely to focus on digital mediums for their advertising spend. 10 © 2022 SG Analytics Pvt. Ltd. | Not Licensed For Distribution.

11. New Age Advertising Market Outlook, 2022–2024 Expansion of the e-Commerce Market The pandemic has been majorly responsible for the entry of many new e-commerce and e-delivery service solutions, thereby resulting in a spurt in social media advertising over the past few years. Generation Z Will Drive the Adoption of Digital The Generation Z group of population (people born between the years 1997 and 2012) currently constitutes the largest sub-segment of the global population and is a primary force in influencing digital advertising spend due to their access to SMAC devices and solutions. Digital Advertising within the OOH Space The OOH segment of ad spending is also witnessing migration from static to digital advertising billboards, especially due to the decreasing costs of digital billboards, ability to integrate analytics and tailor-made advertisements, and greater return on investment (ROI) per site. Smart Technologies and Crypto Currency Driving Digital Technological innovations such as the adoption of smart home devices are changing the way digital advertising is done. The adoption of such technologies opens possibilities to integrate several analytics and AI-based solutions to enable advertisers optimize their digital ad campaigns and in turn generate higher ROI. Furthermore, the exploration of crypto-driven digital marketing is gradually driving opportunities for digital advertisers. Current and Future Outlook – Key Takeaways Mobile Will Lead the Way The inequality of wealth distribution among population globally results in under-penetration of mobile devices, which is one of the biggest hindrances to the growth of digital ad spending in certain regions. Such heavy emphasis on the importance of mobile penetration is because of the following reasons. Compared to laptops, tablets, desktops, and other devices, the highest increase in web traffic has been witnessed within the mobile devices segment. Countries with low penetration of mobile devices are also expected to witness the highest rates of adoption of mobile devices compared to other devices (mobile is also the fastest growing segment in countries with underpenetrated digital solutions). This is expected to result in significant opportunities for digital advertising growth globally due to the continuous adoption of mobile phones by certain countries. 11 © 2022 SG Analytics Pvt. Ltd. | Not Licensed For Distribution.

12. New Age Advertising Market Outlook, 2022–2024 Geopolitical Issues Will Continue to Hinder the Growth of Digital in Certain Regions Countries with the lowest internet adoption are the ones with unstable and volatile political and economic environments such as North Korea, Somalia, South Sudan, Kiribati, etc. The future looks bleak for digital ad growth in these countries due to restrictive governmental policies, lack of freedom, and less optimum ROI even if initiatives are undertaken. Key Regions Expected to Drive Opportunities for Digital Marketing Some of the main countries that are expected to witness significant growth opportunities within the digital ad spending space globally are India, China, Pakistan, Bangladesh, Nigeria, Ethiopia, Congo, Indonesia, Brazil, and Tanzania. 12 © 2022 SG Analytics Pvt. Ltd. | Not Licensed For Distribution.

13. New Age Advertising Market Outlook, 2022–2024 AUDIENCE INSIGHTS Internet Adoption and Device Usage Statistics Figure 8 provides a breakdown of the total global population by access to digital technologies and solutions such as mobile phones, internet connectivity, and social media. The following sections provide insights on understanding behavioral attitudes and preferences of certain population groups with access to internet and digital solutions. Figure 8 Breakdown of Population by Access to Digital Technologies & Solutions: Global, 2021 Source: HootSuite The total number of users with access to internet during the year 2021 amounted to around 4.95 billion, constituting close to 63% of the total global population. A significant proportion of this population having the power to influence digital trends comprises people between 16 and 64 years of age with access to the internet. Figure 9 provides a breakdown of internet users between the age of 16 and 64 in terms of access to various devices. 13 © 2022 SG Analytics Pvt. Ltd. | Not Licensed For Distribution.

14. New Age Advertising Market Outlook, 2022–2024 Figure 9 Breakdown of Population of Internet Users Aged 16 to 64 by Type of Devices Owned: Global, 2021 Source: HootSuite Mobile phones (any type), smart phones, laptops or desktop computers, and tablet devices are important and highly effective mediums for ad placement, comprising a significant proportion of adoption by internet users aged 16–64 (Figure 9). A significant proporition of users owning these devices mainly use them to access the internet. At least 90% of smart phone owners and 71% of laptop/desktop users primarily use their devices to access the internet compared to other device owners. However, a comparatively less proportion of smart home, connected TV, and gaming console device owners use these devices to connect to the internet. It is also important to note that the internet usership among these device owners is gradually increasing YoY and hence, advertising through these mediums is expected to show high growth potential in the near term. 14 © 2022 SG Analytics Pvt. Ltd. | Not Licensed For Distribution.

15. New Age Advertising Market Outlook, 2022–2024 Top Websites and Segments for Digital Advertising Mobile and desktop will continue to drive most of the web traffic by internet users. The top five websites that witnessed the highest web traffic by mobile and desktop devices during CY2021 are shown in Figures 10 and 11 and are, hence, the most lucrative and high-yield online platforms for digital advertisers to target. Figure 10 Top 5 Websites by Traffic: Global, 2021 Source: HootSuite Figure 11 Top 5 Websites by Share of Traffic, Mobile vs. Desktop: Global, 2021 Source: HootSuite Besides search, the two most popular visited categories of websites by traffic were video and social media (Figures 10 and 11). Following are some trends across these two segments. 15 © 2022 SG Analytics Pvt. Ltd. | Not Licensed For Distribution.

16. New Age Advertising Market Outlook, 2022–2024 Video – Key Trends and Takeaways YouTube is the number 1 video platform that has the highest growth potential for ad spending. The top 5 countries with the largest audience for advertising are India, USA, Indonesia, Brazil, and Russia. Figure 12 shows some of the top trending video content by video platforms. The following figure shows some of the top trending video content viewed by Video platforms Figure 12 Breakdown of Internet Users aged 16 to 64 by types of Videos watched: Global, 2021 Source: HootSuite • Some of the top search categories and terms trending across video include songs, DJ, dance, TikTok videos, and minecraft. • Advertising through online music videos can be termed as one of the highest growth potential areas within digital advertising, which will continue to drive growth. Certain newly released songs (2015 and onward) have become incredibly popular with viewership in billions and are thus very high-value videos to place advertisements in. • Another example is older evergreen music consisting of classic rock songs and all-time favorite movie themes (e.g. The Godfather), which witness a high viewership and are lucrative spots for placing ads in. • Another major trend witnessed in the video advertising segment includes the rising effectiveness of advertising through in-game apps (mobile games). • This trend was majorly caused by the spike in mobile gaming app downloads during the years 2019 and 2020, as a result of the effects of the pandemic and subsequent lockdowns on users’ need for entertainment. In conclusion, tailor-making ads to fit the differences in demographics/audience profiles and respective viewership preferences across mobile and desktop need continuous innovation and improvement to consistently optimize ROI. 16 © 2022 SG Analytics Pvt. Ltd. | Not Licensed For Distribution.

17. New Age Advertising Market Outlook, 2022–2024 Social – Key Trends and Takeaways • Facebook is the number 1 ranked website with close to 2.9 billion active users globally and can also be considered one of the most lucrative social media platforms for advertising for the following two reasons: ■Ao As per a survey by GWI (www.gwi.com) in 2021, close to 35% of internet users aged 16 to 64 used the website for the purpose of ‘reading news stories’, thus positioning the platform as a valuable medium for banner ads. ■As per the same survey, close to 44% of internet users tend to use social media websites for the purpose of finding information about products and brands. • The top five countries with the largest audience for advertising across social media are India, USA, Indonesia, Brazil, and Mexico. • Besides the purpose of primarily keeping in touch with family and friends and following their activities, some of the key accounts followed on social media platforms are the ones of trending actors, comedians, bands, and artists, among others. • Influencer marketing provides major growth opportunities for social media- based advertising especially in countries such as the Philippines, Brazil, Nigeria, Indonesia, and Argentina In conclusion, although the trust ratings of social media-based advertising among the general population are comparatively lower than other print mediums such as newspapers, social remains one of the most lucrative mediums for optimizing ROI on ad spend. This is because social media-based advertising that incorporates authentic messages from major influencers has a significantly higher impact on influencing younger generations, which comprises most of the global population, especially when targeted in the right way. GLOSSARY List of Abbreviations and Explanation of Terms SMAC Digital : : Social, Media, Analytics and Cloud In most cases, unless otherwise mentioned, refers to the expenditure on digital advertising (viz. expenditure on audio-visual ads placed on digital mediums and platforms). Gross Domestic Product Out-Of-Home (OOH) refers to outdoor advertising mediums such as static and digital billboards. The terms OOH, Outdoor and Out-Of-Home may be used interchangeably in the report but they have the same definition. Audio and/or Radio both refer to segment of expenditure incurred from the radio medium of advertising. Year-over-Year Calendar Year Returns on Investment GDP OOH : : Audio YoY CY ROI : : : : 17 © 2022 SG Analytics Pvt. Ltd. | Not Licensed For Distribution.

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