Commentary

Forecast: Digital Ad Spending To Grow, Print Will Stabilize

The economic consequences of the coronavirus pandemic will weigh on media spending next year. Publishers will feel mixed effects as advertisers seek to reach audiences through digital channels, according to a forecast by WARC.

The researcher predicts global ad spending on newspapers will be little changed — $9.8 billion in 2021, following an expected 26% plunge this year that was the worst performance for the industry in more than 40 years. Magazines also will hold steady, with an expected $4 billion in spending next year, showing no sign of rebounding from an estimated decline 25% this year, according to WARC.

Online display ads will see spending growth of 10%, although social media and online video will drive most of those gains.

WARC forecasts that online video will be the fastest-growing format, with spending expected to rise by almost 13%.

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That spending can be positive for publishers that either sell online ads in video content they produce and host on their own websites, or participate in revenue-sharing arrangements with platforms like Google's YouTube.

Online classifieds also will rebound with a 6.7% gain in 2021, partly recovering the 14% drop this year. However, much of the classifieds business has shifted to online platforms like Craigslist, making it harder for local newspapers to see any benefit from the recovery.

Travel, Tourism To Lead Gains

Among industry categories, WARC forecasts that travel and tourism will see the strongest rebound in spending at almost 20% — an optimistic sign that recent news about successful coronavirus vaccines will help bring an end to the pandemic.

Ad spending in those industries plunged 34% this year as consumers shunned air travel and health authorities urge people to avoid unnecessary trips.

Alcohol brands will boost spending by 19% next year, after pulling back their spending by 29% in 2020.

Restaurants and bars bore much of the brunt of the pandemic. If there are signs the health crisis has been contained, on-premise alcohol sales have a chance to bounce back.

Total ad spending will rise 6.7% to $594.6 billion next year, partly offsetting this year's 10% drop to $557.3 billion, WARC predicts.

The ad market will need to grow 4.4% in 2022 to reach the record level of $620.6 billion from 2019.

For publishers, the forecast indicates that print advertising will stabilize, and that they are more likely to see growth in digital advertising including from online video.

Not mentioned in the forecast are subscription sales, which have become a key source of revenue growth for publishers as they seek to make up for declining ad revenue.

Those pressures are likely to persist as the global economy continues to recover from the pandemic.

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