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“2020 will ultimately be remembered as more of a mild setback than an industry-changing economic catastrophe.”
GroupM has published its This year next year: End-of-year advertising forecast reports for the US, the UK, and Global regions. Although several categories have witnessed decline due to the pandemic, things are not as bad as it was being expected earlier in the year when it began.
Despite a slowdown in the second quarter, for the year, internet-related media is positioned to grow. In 2021, it will likely accelerate to achieve growth rates that exceed 2019 levels.
US End-of-year forecast, GroupM
“It could have been worse,” the authors write in the Global report. “It’s hard to say much else that’s positive about 2020 for the advertising industry other than to note that it has turned out to be less bad than we expected in the middle of the year.”
For the media business, 2020 will ultimately be remembered as more of a mild setback than an industry-changing economic catastrophe.
Global End-of-year forecast
Takeaways for publishers:
“The key factor underpinning growth”
One of the “bright spots” of advertising in 2020 has been digital. Globally, digital advertising is expected to grow by 8.2% during 2020, excluding US political activity. It is estimated to grow by 4.9% in the UK during 2020 with additional growth of around 12% in the coming year. In the US, the report forecasts 5% growth this year on an underlying (ex-political advertising) basis. In 2021, an additional rate of growth of around 18% is expected.
The key factor underpinning growth is eCommerce activity, alongside other forms of pandemic-accelerated digital transformation. There are almost certainly vast numbers of new small businesses that only recently started advertising but that now collectively spend significant sums online.
Global End-of-year forecast
The global report estimates that pure-play digital media owners will collectively capture 61% of all advertising next year. This represents a doubling of share since 2015. Digital will account for 55% of all advertising in the US and 68.5% in the UK in 2021.
“Seize this opportunity with product innovation”
eCommerce-related advertising is expected to experience rapid growth in both the UK and the US. It will rise by around 50% in the UK this year and 66% next year, reaching £2.4B in media owner ad revenue by 2024.
Search advertising will remain flat in the UK this year and underperform in the US. This is largely due to exposure to the most heavily impacted categories like travel. It is expected to grow in 2021 in both countries. The report forecasts a growth of 7.5% in the UK.
Ad revenue from print media, including newspapers, magazines and their digital extensions is expected to decline by 23% this year in the UK, followed by a rebound of 13% in 2021.
We believe that digital publishers could stand to gain from the phasing out of third-party cookies, which will encourage a reappraisal of the value of context over audience. If publishers can seize this opportunity with product innovation and investment in high-quality content, we expect an improved outlook for the [print] medium.
UK End-of-year forecast
In the US, a 30% decline is expected for newspaper publishers and 20% for magazine publishers. “There are still positive stories to tell, particularly for titles that shifted their revenue generating activity toward digital media, emphasized subscription revenue streams or pursued national or global audiences,” the authors note.
“As captivating to advertisers as they are to listeners”
Revenues from radio stations and audio-based media will fall by 16% this year and are forecasted to grow nearly 12% in 2021 in the UK where audio commands 2% of industry spending. “This presents opportunity for growth over time, especially as new digital formats emerge,” according to the report.
Podcasting has attracted many large marketers and may serve as a point of entry to the broader world of audio for many of those not presently using it. Finally, streaming services such as Spotify provide some “sizzle” to encourage further growth in audio spending as well.
UK End-of-year forecast
In the US, audio advertising will fall by 27% during 2020 and is expected to grow by 6.6% in 2021. The authors comment “where audio does sell nationally, it has opportunities for further growth, with digital advertising formats helping to mitigate the declines.
“Podcasts in particular have proven to be as captivating to advertisers as they are to listeners, and digital platforms such as Pandora and Spotify have fared much better than other types of audio.”
Robust growth to continue till at least 2024
“Looking at 2021, an assumed second-half return to normalcy paired with the significant growth that followed the trough of 2Q this year leads to expectations for robust growth of 11.8% on an ex-political basis, or 6% including it,” the authors write in the US report. In the UK, an overall growth of 12.4% is estimated.
Globally, digital advertising should accelerate in 2021. Beyond that the authors expect “robust growth at a high single-digit level” to continue through at least 2024.
The reports can be downloaded from GroupM:
This year next year: End-of-year forecast reports: US, UK and Global
