Forecast: Ad Spending Will Drop 13% This Year

U.S. advertising spending is expected to plunge by 13% this year, the world’s largest ad buyer said, the latest sign of the toll the coronavirus pandemic is taking on businesses and economic activity.

The Wall Street Journal reports GroupM, a unit of WPP PLC, expects ad spending in the U.S. to drop to $207.9 billion this year from $238.8 billion in 2019, excluding political-ad outlays. As recently as December, the company was forecasting U.S. ad spending would rise by 4% in 2020.

Wall Street Journal graphic

Advertising is often among the first things cut by companies looking to trim spending in times of economic uncertainty. Beginning in March, as swaths of the global economy were sidelined by government measures to restrict the spread of the coronavirus, companies in the travel, retail and automobile sectors started cutting back on ad spending.

One silver lining comes from the coming presidential election, traditionally a boon for ad spending. GroupM estimates that factoring in the effect of political dollars, overall ad spending is expected to fall by 8%.

The ad contraction is being felt across the media landscape. GroupM expects spending on national TV ads to decline 11% this year, compared with a previous forecast of flat growth.

Despite the fact that stay-at-home orders helped buoy TV ratings, many brands paused TV spending to make sure their ads hit the right tone while some big advertisers sought to cancel a portion of the spending commitments they had previously made to broadcast and cable networks.

After cutting back on spending during the pandemic, many marketers are also still trying to figure out what 2021’s budgets will look like—a tough task given the economic uncertainty. Still, some advertisers want to begin deal-making to take advantage of the uncertainty in the marketplace, which could yield better ad prices, according to people familiar with the discussions.

The health crisis is expected to accelerate the decline of print media such as newspapers and magazines—sectors that have already been in decline for some time. Print will see the biggest drop, falling 26%.


While investment in digital extensions of print businesses has helped some offset some of the losses, “publishers will continue to lose share to other forms of media, especially digital media,” GroupM said.

Digital ad spending is expected to fall just 3%, a far cry from GroupM’s December forecast that expected a 13% increase.

GroupM and other ad prognosticators are optimistic the ad market will return to growth in 2021, fueled partly by a surge in digital advertising. GroupM anticipates the U.S. ad market will grow 4% next year, while research firm MoffettNathanson expects a 9% increase.

“We see a solid bounce back in ad spending in 2021 led by 20% growth in online ad spending,” said Michael Nathanson, an analyst at MoffettNathanson, in a note to investors last month.

GroupM and MoffettNathanson said surges in digital advertising will be fueled by acceleration of e-commerce and the ability to produce more targeted and efficient results—both of which will benefit tech giants Google and Facebook Inc.