Commentary

Digital Investments Are Still Key For Publisher Ad Growth

The economic recovery is driving greater demand for advertising, with media agency GroupMlast week nearly doubling its 2021 forecast for U.S. growth in media spending. The estimate is encouraging, though the agency cautions publishers will continue to face challenges if their digital growth isn't enough to overcome the ongoing decline in print ads.

GroupM revised its growth forecast for nonpolitical ad spending to almost 17% from its last estimate of 9.1% in March. Some of the growth reflects an easy comparison with last year, when the pandemic led to an 0.8% decline in spending to $239.1 billion. Digital growth wasn't quite enough to overcome the double-digit declines for most other categories, including newspapers, magazines, out-of-home, radio and local TV.
For 2021, the agency forecasts a 4.3% slide for newspapers to $8.32 billion and a 3.4% decline for magazines to $10.9 billion. Whether those publishers participate in the expected 37% growth to $85.1 billion for non-search internet ad spending will depend on their digital investments, according to GroupM.
Also uncertain is the effort by publishers to seek a temporary exemption from antitrust laws, which would allow them to collectively bargain with social media and internet search companies on content licensing fees. Congress has yet to approve the proposed Journalism Competition and Preservation Act (JCPA).
“It remains to be seen whether legislative efforts to empower publishers to negotiate collectively with Facebook and Google will make much of a difference," according to GroupM. "However, to the extent that incremental revenues are generated from related licensing activity and redeployed into content, individual publishers will be poised to benefit, and the industry might experience a diminished pace of decline.”
Its outlook only helps to confirm what many publishers have realized in the past decade.

To better control their destiny, they need to diversify their sources of revenue with direct-to-consumer efforts. Those not only include subscriptions and paywalls, but also affiliate sales, events, premium editorial products and memberships with value-added services.

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