GroupM recently released its “This Year, Next Year U.S. Media Forecasts” report on U.S. ad spending, which found mostly good news for the ad industry.
The report estimated ad growth of 6.2% for 2019 to $244 billion.
GroupM’s Brian Wieser attributed this growth in part to large spending by “digital first” advertisers. “Eight companies alone accounted for about $26 billion in ad spending [last year]. This year it’s reasonable to assume it’s north of $30 billion globally,” he said. “It’s not just them, it’s the next tier…large digital companies with large nine-figure ad budgets skewed toward digital advertising.”
Unsurprisingly, digital advertising continues to be the fastest growing area of spending by a wide margin. According to the report, “pure-play internet” (which excludes digital revenues associated with traditional media owners) will have grown by nearly 20% by the end of 2019, which is down from the 22.1% growth rate last year. That growth rate is expected to continue to fall to earth in subsequent years, declining to 12.8% in 2020 and single digits following year, according to GroupM. The report concludes that pure-play internet will represent 46.1% of all advertising for 2019, up from 40.8% last year, while estimating that it will grow to half of all advertising next year.
Following slight growth of 0.7% last year, TV advertising is estimated to decline 2% for 2019 to a 26.4% share of all advertising, according to GroupM. The report estimated that decline rate will slow in 2020, falling by 0.9% to a 25.2% of all advertising. OOH saw a strong rebound in 2019, according to the report, with a growth rate of 8%, compared to 1.5% last year, while its share of all advertising remained flat at 3.4%. Next year, the report estimates that growth will continue, with OOH growing at 5.5% to a 3.5% share of all advertising.
Looking ahead to 2020, the report estimates that ad spending’s growth rate will slow to 4%, when political advertising is excluded. Wieser explained this estimate is tied to an expectation the economy will revert to normalcy following a period of growth.
Political advertising of course, will represent a not insignificant portion of ad spending.
“Political advertising has gotten so big and doesn’t show any signs of abating. The thing that’s new to me is how much fundraising increased. If fundraising is up,” Wieser said, “it strongly indicates that political spending will be up.”
The report estimates that with U.S. political fundraising approaching $16–20 billion for 2020 ,political ad spending will reach $10 billion or more.
“The growth in digital for political campaigns is higher than the overall market from a low base,” Wieser said, “which speaks to the nature of the politics involved,” with newer candidates more likely to pursue digital advertising than incumbents. “As time progresses, candidates retire or choose not to run. You end up with a newer generation more likely to incorporate digital.”
While federal elections represent a small portion of overall political ad spending, Wieser explained that high profile 2020 federal elections could lead to a down ballot impact, and an impact on political ad spending.