While parts of the economy remain in tatters due to COVID-19 GroupM’s latest ad spending forecast for the U.S. finds that the damage won’t be as a bad as the firm initially believed in June when it predicted a 13% drop in advertising (excluding political) for this year.
Now the company is forecasting just a 9% drop for 2020 on an underlying basis to $214.5 billion. But add political—a massive $14 billion this year—and the overall decline is “only” 3.9% for a total of $228.1 billion.
That’s a steeper decline than the ad recession of 2001, but “certainly better” than the fallout experienced after the financial crisis of 2008, GroupM concludes.
And 2021 is forecast to yield a solid double-digit underlying gain of 11.8% to nearly $240 billion. Factor in political and the growth is still a healthy 6.2% to $242.1 billion. For 2022, the firm is forecasting underlying growth of 4.8% and for the following two years an additional 4% growth for each. The growth in all three years will reflect “an accelerated pace of investment in digital media by marketers of all sizes,” per the report, entitled “This Year, Next Year.”
The forecast, penned by GroupM Global President, Business Intelligence Brian Wieser, describes the recovery as “K-shaped,” where some parts of the overall and advertising economy recover quickly after taking a beating while other parts continue to suffer extremely.
Digital, for example, took a sizeable hit early in the year but rebounded by the third quarter. But locally-skewed traditional media like radio, newspapers and OOH plummeted in Q2 and continued to decline sharply in Q3.
Digital is the “bright spot” in a pretty dark year for the industry, and will grow by 9% during 2020 on an underlying basis. During 2021, GroupM estimates that digital advertising will account for 55% of all advertising it tracks. During 2020, roughly 4% of total digital advertising was political.
National TV advertising will see a decline of 7.9% during 2020 and rebound with 6.6% growth during 2021. At that pace, national TV is faring better than every category of media other than digital, per the report.
Local TV advertising will have an underlying decline of 21% this year but, next year should experience a 2.7% underlying gain.
OOH advertising, including its digital extensions, will decline by 31% during 2020 on an underlying basis. Next year the report forecasts a partial rebound of 23% growth.
Audio advertising, including its digital extensions, will fall by 27% this year (underlying) with what the report described as “muted growth” next year of around 6.6%.