The lack of major sporting events like March Madness has hit U.S. advertising hard.
Turns out there is one silver lining that may emerge from the great COVID-19 crisis in advertising. While U.S. ad spending will drop this year, the decline won’t be as bad as the one recorded in 2009, when the combination of the global recession and the growing prominence of (lower-priced) new media as preferred advertising vehicles combined for a devastating year.
Ad spending dropped 16% in 2009, and this year it will fall a still-serious-but-less-dramatic 13%.
That’s according to a new report from GroupM, one of the world’s biggest media buying agencies.
The report actually expresses a dry surprise that this year’s decline won’t be higher.
“That we ‘only’ expect a 13% decline is surprising,” wrote respected ad forecaster Brian Wieser in the report. “We might normally expect that because the 2020 economic decline is so much worse than 2009, advertising should be much weaker.”
Wieser noted that some companies have recovered more quickly than initially thought possible, sparking some optimism.
However, the report sounds the alarm on troubling developments. The absence of live sports throughout most of the spring—a few, such as NASCAR and golf, have begun coming back—was a huge loss for television (even though overall viewership surged briefly). March Madness, for instance, generates nearly $1.3 billion in ad revenue, and it didn’t take place this year.
The GroupM figures exclude political advertising, which is still expected to be very high this year with the November presidential election, contributing billions to the media economy. TV ad spending will slide 7% this year even when you include political spending, GroupM predicts.
Long-range, GroupM is forecasting ups and downs for the medium, with this year’s 11% dip for national television becoming a 6% rise next year. Little surprise, GroupM sees greater growth potential for digital TV extensions (think Roku), which will see a slight drop this year but a big rebound next, up 15%.
Local TV is being hit the hardest, with a lot of small businesses pulling back on advertising. Without political, the medium will plunge 34% this year.
Digital is, not surprisingly, holding up the best. It will be down 3% this year but rise 12% next year, reflecting the continued boom for new media.
GroupM’s forecast is more pessimistic than another recent one from Magna Global, which projected a 7% decline (6% without political advertising) this year.
