Despite a pace of economic decline that will produce the worst economy since the Great Depression, the overall U.S. ad market won’t decline this year as much as originally thought. A new forecast from GroupM says the downturn will be about 9%, an upward revision from the 13% hit the agency holding company called for back in June.
The driver is continued strength in digital advertising and “the unexpected pace at which digital’s small-business-skewed customer base expanded its spending,” according to Brian Wieser, Global President of GroupM’s Business Intelligence.
Calling digital advertising the “bright spot in an otherwise dark year for the industry,” Wieser says digital will comprise 55% of all advertising GroupM tracks. Political was a major catalyst during 2020 as roughly 4% in total digital advertising was for political candidates and issues advertising, representing around 3% of the year’s gains.
National TV advertising is on track to dip 7.9% during 2020 and rebound to grow by 6.6% during 2021, before returning to a flat or slightly declining longer-term trend. “At this pace, national TV is faring better than every other category of media other than digital,” Wieser writes in the forecast.
Local TV didn’t do as well, at least when subtracting political dollars from the equation. Underlying advertising for local TV is expected to fall 21% this year after a flat 2019 with a 2.7% underlying gain in the cards for 2021. Political and issue advertising reached record levels on local broadcast and cable by the end of November and could clock in at $7 billion for the year, when taking into account the massive amounts still being spent in Georgia’s run-off elections for two U.S. Senate seats.
Audio advertising, including its digital extensions, will fall by 27% to $12.0 billion during 2020 on an underlying (ex-political advertising) basis, following 2019’s 2.1% rate of growth. The forecast calls for “muted growth” of around 6.6% for audio in 2021, “reflecting a weak local market for advertising and a first-half that will probably be particularly negative for locally oriented media.”
Looking ahead to 2021, GroupM is calling for total U.S. advertising growth of 11.7% on an ex-political basis, or 6% including it. Beyond that the forecast calls for “slightly higher growth than we previously forecast,” coming in at +5% in 2022 followed by +4% for both 2023 and 2024.
In other key takeaways:
Print media is expected to decline 19% for magazine publishers and a 30% decline for newspaper publishers. “It is our view that neither the magazine nor newspaper sectors will ever exceed $10 billion in ad revenue in their current forms, even including existing digital properties,” Wieser says.
Outdoor advertising, including its digital extensions, will decline by 31% during 2020 on an underlying (ex-political advertising) basis, following 2019’s 10% rate of growth. Next year should see a partial rebound of 23% growth, before tapering off toward 5% in subsequent years.
Direct mail is estimated to generate around $13 billion in revenue during 2020, down 26% on an underlying basis but only 21% including political advertising. A partial rebound of 10% growth is anticipated for next year or 17% including political, before resuming single-digit declines.
Cinema advertising is unlikely to see any meaningful rebound until traditional movie-going returns.
Read the GroupM forecast HERE.