Despite a shattered economy that frightened many at the onset of the pandemic, the advertising industry’s overall decline this year is poised to be less dramatic than originally predicted, which bodes well for its recovery in 2021, a new forecast from media agency GroupM suggests.
Currently, the outlook for next year is K-shaped, GroupM says, meaning some categories will see rapid, healthy growth that approaches or exceeds pre-pandemic levels, while others will continue to endure a downward trajectory.
“The big takeaway is, it could’ve been worse,” says Brian Wieser, GroupM’s global president of business intelligence. He recalls scaring colleagues in March and April by musing that the coronavirus-induced economic slump could be as severe as the Great Depression, but in the end, COVID-19’s impact on the advertising industry was even less major than the 2008 financial crisis.
“You ended up with a year that, overall, is bad by any normal point of comparison, but is just not as bad as it could’ve been,” he says, pointing to the industry’s post-9/11 decline as a more comparable event.
The industry will experience a year-over-year decline of approximately 9% in 2020, GroupM’s End-of-Year Forecast suggests, which is significantly better than the full-year slump of 13% it initially predicted in June.
Excluding cyclical factors such as this year’s massive political ad spend, which bolstered many otherwise-suffering verticals, digital is poised to continue its role as a “bright spot” for advertisers, growing 18% in 2021 on top of the 5% growth it saw this year.
Digital advertising has become so prominent, in fact, that GroupM believes it will soon account for 55% of all advertising tracked in the U.S. media economy, the report says.
With the notable exception of digital, and not including non-standard political spend, most advertising categories recorded significant declines in 2020: TV fell by 7.9%, audio by 27%, and out-of-home by 31%. Next year should bring modest growth with the return of “normal” consumer behavior by the second half of 2021, though weak demand for non-digital media overall will stymie many categories’ attempt to rebound to pre-virus levels.
Most sectors have adjusted—for better or worse—to the initial shock that accompanied the onset of the pandemic, and with several major biotech firms now releasing promising clinical trial data, there’s hope that an imminent COVID-19 vaccine may usher in an economic rebound in the U.S.
From a marketer’s perspective, such a return to normalcy will be evaluated using more societal metrics, rather than by how many vaccine doses are distributed, Wieser says, with the industry looking at benchmarks such as when film studios begin producing movies or people start to travel again. But even then, he believes it’s important to not lose sight of the ad industry's year-over-year growth in a broader historical context.
“As robust as the data looks in some ways … we’re only just now getting back to 2007 levels,” Wieser says. “We’re just making up for a lost decade-and-a-half.”
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December 02, 2020 at 01:25AM
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Ad industry's pandemic slide not as bad as originally projected, according to new forecast - AdAge.com
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