GroupM is forecasting U.S. ad growth next year of 4% to approximately $253 billion. That’s underlying growth that excludes political advertising, which is currently projected to be about $10 billion. Including political would raise next year’s growth rate to 7.1%
That’s on top of underlying growth in the U.S. this year of 6.2% to $244 billion, marking the fourth consecutive year of solid mid-single-digit growth, per the GroupM forecast. It was compiled by Brian Wieser, global president, business intelligence, for a report called "This Year, Next Year."
Wieser’s latest 2019 estimate marks an upgrade from June, when he forecast 5.8% U.S. growth this year -- tempered by what he saw then as fragile “economic foundations supporting the advertising industry.”
Also contributing to the upgrade is a digital ad sector that remains quite robust, with 20% growth for 2019 and 15% growth for 2020.
Advertising revenue to pure-play internet-based companies is expected to grow double-digits next year to reach $127 billion, representing a 50% share of industry revenue.
Eight digitally focused brand giants alone (Facebook, Amazon, Netflix, Alphabet, eBay, IAC, Uber and Booking.com) likely spent more than $30 billion on advertising globally, Wieser reports, with most of those dollars earmarked for the U.S.
And while spending from those “big eight” will abate over time, more digital firms with the potential for enormous growth are in the pipeline, such as the slew of new and existing streaming video services that Wieser sees pumping “billions of dollars in domestic advertising spending” by the time they’re all operating at scale.
That said, Wieser writes that he expects some softening in 2020 “as the economy reverts toward normalcy after a period of growth likely supported by factors including the 2017 domestic tax cut, an expanding federal deficit and low interest rates.” He adds: “As the effects of these fade, heightened trade barriers should concurrently become a drag on the overall economy.”
For now, Wieser says his best “feel” for growth for the three years after 2020 is 3% annual growth.
Excluding political, underlying television advertising in the U.S. is trending toward a low-single-digit decline this year, according to the report.
National TV advertising will be closer to zero, or even up very slightly, while local is down by low-single-digits.
“We expect this declining trend to persist, even with new forms of premium TV advertising regularly emerging,” Wieser wrote. “Certainly the ad-supported SVOD services will be attractive environments and their enhanced targeting capabilities will also appeal to advertisers. They will partially offset the ongoing erosion of traditional TV’s reach and frequency, but the core set of advertisers that have historically driven TV spending are likely to reduce the budgets they allocate to the medium.”
Radio is expected to be flat going forward, and print will continue to be weak, “although it retains value as a niche medium,” per the report.
Out-of-home advertising will remain the fastest-growing “traditional” medium with 8% growth in 2019 to $8.3 billion. That growth has been supported by innovation, especially in the digital OOH sector, according to the report. But growth in the medium will likely moderate to 4%-5% during the next five years.
GroupM is expected to issue a new global forecast next week.