Advertising Spending Roars Back

Magna Global and GroupM have raised their forecasts for advertising spending, citing unexpectedly robust demand from marketers spurred by the Summer Olympics, and the ending of some restrictions implemented to halt the spread of the Coronavirus, reports Forbes

U.S. media owners’ advertising revenue will hit $278 billion in 2021, an increase of 23 percent, Magna Global said. In June, Magna Global, a  media investment and intelligence company, had estimated spending at $259 billion.

GroupM expects global spending is forecast to jump 19 percent in 2021 excluding U.S. political advertising, a revision from the 12 percent increase GroupM forecast in December. Marketers are expected to shell out $1 trillion for advertisements in 2026, an increase from $641 billion in 2020 and $522 billion in 2016. According to GroupM, the top 25 media companies accounted for 67 percent of total advertising revenue in 2020 compared with 42 percent in 2016.

“As strong as 2021 should be, other negative trends could still hinder growth,” according to GroupM. 

“The ongoing shortage of semiconductors that is causing a wide range of industries to shut down or slow production is generally expected to be temporary. Advertising budgets may be barely impacted if the most affected marketers focus their spending on longer-term brand building or limit their use of scarce parts to their highest-value products. Still, it is a risk that could become more meaningful if the underlying problems persist throughout the year.”

Spending overall jumped 32 percent during the first six months of the year compared with the same time in 2020, fueled by gains across multiple industry verticals and platforms. Automotive, finance retail, and restaurants posted gains of 50 percent or higher in the first half as they reintroduced themselves to consumers after taking a pause during the pandemic. 

“The rebound was much stronger than anyone expected,” Vincent Letang, EVP, market intelligence at Magna Global, told PRWeek.   “Cases are up, but whether they are vaccinated or not, people are coming back to their pre-COVID lifestyles. This latest surge, so far, is not threatening to derail the economic recovery.”

Revenue from traditional media owners (long-form video, publishing, and outdoor) rose 11 percent during the first half of the year while digital formats (search, social, short-form video, digital audio) gained 49 percent during that same time, according to Magna Global.