According to GroupM’s U-S media forecast for 2020, this will mark a fourth consecutive year of solid mid-single-digit growth for the industry on an underlying basis. Taking out directories and direct mail makes the health of the industry look even stronger, with a +7.6% underlying growth rate for 2019, although including political advertising in all years brings growth down a few notches to +3.8% all in. However we look at it, growth has been robust relative to the general economy, which is generally decelerating on an underlying basis.
2020 still looks solid; GroupM us forecasting +4.0% growth next year. They expect some softening next year as the economy reverts toward normalcy after a period of growth likely supported by factors including the 2017 domestic tax cut, an expanding federal deficit and low interest rates. As the effects of these fade, heightened trade barriers should concurrently become a drag on the overall economy.
Digital-first marketers are likely driving much of the industry’s recent growth. GroupM previously written about the emergence of massively scaled digital brand owners whose businesses are endemic to the internet. They point to Facebook, Amazon, Netflix,Alphabet, eBay, IAC, Uber and Booking.com as eight companies that are likely to spend more than $30 billion on advertising globally this year. Most of this spending will go into their home market, the U.S., adding billions of incremental spending every year into the domestic advertising economy.
Overall, GroupM's best “feel” for the advertising market is to forecast a lower growth rate beyond 2021, and they incorporate a +3.0% expectation for subsequent years.
- Advertising revenue to pure-play internet-based companies should grow by double digits next year to reach $127 billion in revenue, representing a 50% share of industry revenue.
- TV advertising is soft as we close 2019 and will end the year with a -7.0% decline (-2.0% excl. political), falling to $65 billion in ad revenue. Of course, many of the digital-first brands we’ve been discussing will also spend on traditional media, especially television. While defining a “digital brand” is highly subjective, those marketers are undoubtedly making up for most of the cuts in spending that other marketers appear to be making. Excluding political, underlying television advertising is trending toward a low-single-digit reduction during 2019. National TV advertising will be closer to zero, or even up very slightly, while local is down by low-single-digits.
- Outdoor should be the fastest growing “traditional” medium, up by +8.0% to reach $8.3 billion.
- Radio is likely to be flat going forward. Radio appears set to hold on to its revenue base this year and is not likely to grow by much any time soon. While there is growing interest in the medium from national advertisers—especially supported by the likes of Pandora and Spotify as well as the emerging category of podcasting—the traditional base of geographically constrained advertisers that should be optimally positioned to support locally oriented media like radio has weakened over time. Globally, radio, or more accurately “audio,” accounts for $31 billion in activity this year, and has generally been less robust than outdoor or television in recent years. GroupM estimates that around the world, the industry declined by -1.1% in 2019 and should grow by +1.8% in 2020. Excluding the impact of political advertising in the U.S., the industry is essentially stable and should grow by 0–1% each year into the future.
- Print will continue to be weak, although it retains value as a niche medium.