Media agency GroupM this week bolstered the argument that publishers need to strengthen subscription revenue with its revised forecast on global advertising spending.
magazine nor newspaper sectors will ever exceed $10 billion in ad revenue in their current forms, even including existing digital properties," GroupM said. "This is not only due to competition from pure-play digital media owners, but also disinvestment in content and
a limited tolerance for diminished profit margins among publishers.”
Excluding political ads, the agency expects magazines to see a 20% decline in ad revenue to $8.7 billion
this year, while newspapers will experience a 30% drop to $8.8 billion, with the pandemic having a disproportionately negative effect on print media.
“There are still
positive stories to tell, particularly for titles that shifted their revenue-generating activity toward digital media, emphasized subscription revenue streams or pursued national or global audiences,"
according to its report. "But overall, the legacy print publishers are likely to experience ongoing declines, even when compared to the unusually challenging year that was 2020.”
Describing digital as a "bright spot in an otherwise dark year for the industry," GroupM forecast that spending on pure-play digital advertising will grow 5.4% this year to $110
billion, not counting political ads that helped to lift some segments of the media industry. This year's growth rate is less than one-third of last year's 17% gain in digital.
GroupM revised its estimate for U.S. ad spending, forecasting that it this year will decline 8.8%
to $214.6 billion, not including political advertising.
That's a more optimistic view than its June forecast, when the agency expected a 13% contraction as pandemic lockdowns caused a steep decline in economic activity. With political ad spending of $14
billion, the total decline will be 3.9% to $228.1 billion this year.
In addition, GroupM's estimates for a contraction in magazine and newspaper ad
spending are consistent with those from WARC
, though the researcher did foresee
spending on print ads stabilizing next year.
With the prospect of flat or declining advertising revenue, publishers are most likely to increase the efforts to boost reader
revenue from digital subscriptions.