Digital Ad Spend Was a ‘Bright Spot’ in Advertising’s Dark Year, GroupM Says

As 2020 comes to a close, media giant GroupM thinks that the tumultuous year’s impact on U.S. ad spend may not be as severe as initially predicted. In its end-of-year forecast report, GroupM said it expects a roughly 9% decline in 2020 ad spend year over year, better than the 13% it warned of in June. These figures exclude the impact of political advertising. Digital advertising is expected to grow by 5% in 2020, according to the report. Brian Wieser, global president of business intelligence at GroupM, said this is likely thanks to small businesses that upped their digital ad spend this year as they increased their focus on ecommerce sales. “The resilience of small businesses has been nothing short of breathtaking, as we see in the numbers from Facebook and Google,” Wieser said. Facebook, for instance, reported a 22% year-over-year revenue bump in the third quarter of this year as a result of ad spend on the platform. Wieser added that although many small businesses have struggled this year, "they’re much more digitally present, and they’re probably spending more on advertising." In 2021, GroupM expects digital advertising to grow 18%, exceeding 2019 levels. The report described digital advertising as a “bright spot” in an otherwise “dark year for the advertising industry.” Other sectors, including out-of-home, national television, radio and print, are all expected to experience declines in spend this year. The report said political spend boosted overall figures this year in the U.S. Digital advertising, for example, grew an additional 3% from political spend. While the U.S. experienced the aforementioned overall decline of 9% in terms of ad spend, that figure decreases to 3.9% when political advertising is taken into account. GroupM expects the out-of-home sector to decline 31% this year, excluding political advertising, following a 10% increase last year. However, Wieser said out-of-home media should bounce back relatively quickly. “The appeal of the medium was greatly diminished this year, but the underlying appeal of outdoor advertising remains pretty strong,” he said. “People not leaving their homes for periods of time had negative consequences on the medium.” Wieser also said out-of-home media is “better positioned for a post-pandemic world” than other “traditional” mediums since digital formats have helped the sector grow in recent years. The report says national TV is expected to take a 7.6% hit this year, but is expected to grow 6.6% next year before “returning to a flat or slightly declining longer-term trend.” GroupM expects print to experience double-digit declines this year—more specifically, a 20% drop for magazine publishers and a 30% decrease for newspapers. According to the report, “the legacy print publishers are likely to experience ongoing declines, even when compared to the unusually challenging year that was 2020.” Even so, it says publishers who have managed to “shift their revenue-generating activity toward digital media, emphasized subscription revenue streams or pursued national or global audiences” will find themselves in better shape. Radio is also expected to face declines in 2020. GroupM says it will fall by approximately 27% this year—not including political spending—before growing 6.6% next year. Looking ahead, GroupM said it predicts overall ad spend will grow 11.8% next year, or 6% when the impact of 2020’s political advertising is considered. The media company said it anticipates “slightly higher growth” in subsequent years than previously forecast due to an expected “accelerated pace of investment in digital media by marketers of all sizes.”