Ad market expected to recover in 2021
The advertising market is expected to recover next year, according to the latest forecast from Magna, an advertising agency.
By the numbers: "If the mainstream macro-economic scenario holds, and the U.S. GDP grows by 3.2%, we are looking at a total ad market that would recover by 4% next year," says Vincent Letang, EVP and Managing Partner of Global Market Intelligence at Magna.
Yes but: The growth will mostly be in digital ads, while linear ad markets like TV and radio will barely stabilize.
Driving the news: Letang attributes the gradual stabilization of the market to 4 things:
- The economic reopening
- Political spend increases
- The return of sports to TV
- The Olympics
The big picture: "We think sports programs drives more than 20% TV ad spend in the U.S.," says Letang. Looking ahead to 2021, Letang says the Summer Olympics should generate roughly $800 million dollars of additional ad spend in 2021.
What's next: Nearly every industry is expected to start increasing spend on advertising, but two of the top client verticals, automotive and retail, will continue to struggle.
- "Automotive was an industry that was already stagnating pre-COVID," says Letang. "Even if the economy recovers, the high unemployment rate will be an inhibitor to large ticket items like cars."
- Automotive advertising slumps, combined with an off-year for political advertising, is going to severely impact local TV advertising.