Global media agency GroupM has released its end of year forecasts for the US market, the world's largest, showing the pandemic slump in ad spend not as bad as initially thought.
Back in June, GroupM predicted a 13% decline for 2020. Now analysts at the agency think the fall will be closer to 9%.
The reason? The strength in digital advertising and the unexpected pace at which digital’s small-business-skewed customer base expanded ad spend.
GroupM thinks the ad market will perform better than in 2008 during the fallout of the global financial crisis (GFC).
"The advertising industry is experiencing a K-shaped recovery – the pandemic has seen rapid acceleration for e-commerce and advanced digital services and cratered industries like restaurants, bars, travel, entertainment and traditional retail,” GroupM says.
“Digital advertising is the 'bright spot' in an otherwise dark year for the industry.”
Pure-play digital advertising is forecast to grow by 5% during 2020 on an underlying (ex-political advertising) basis following on 2019’s 17% rate of growth.
During 2021, GroupM estimates that digital will account for 55% of advertising.
National TV advertising will fall 7.9% during 2020 and rebound tby 6.6% during 2021 before returning to a flat or slightly declining longer-term trend.
US forecasts:
Print is expected to fall 20% for magazine publishers and a 30% decline for newspaper publishers. GroupM: "It is our view that neither the magazine nor newspaper sectors will ever exceed $US10 billion in ad revenue in their current forms, even including existing digital properties."
OOH advertising, including its digital extensions, will fall 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, which tapers off toward 5% in subsequent years.
Cinema advertising is unlikely to see a meaningful rebound until traditional movie-going returns, and this will require studios to resume launching major titles in theaters rather than via direct-to-consumer platforms. "Even once the virus has receded, it seems unlikely studios will release as many titles in theaters as they did in pre-pandemic years, meaning admissions are likely to remain below 2019 levels for some time," says GroupM
Audio advertising, including its digital extensions, will fall by 27% during 2020 on an underlying (ex-political advertising) basis, following 2019’s 2.1% rate of growth. GroupM: "Next year should see muted growth of around 6.6%, reflecting a weak local market for advertising and a first half that will probably be particularly negative for locally oriented media."
Direct mail is estimated to be down 26% to $13 billion in revenue during 2020. GroupM: "We expect to see a partial rebound next year for 17% growth, or 10% including political, before resuming single-digit declines."
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