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Expand chart
Data: GroupM; Chart: Will Chase/Axios

The advertising industry, plagued last year by pandemic-driven budget cuts, is poised to return stronger than ever in 2021 and beyond, according to several new forecasts.

Be smart: The quick turnaround means that the ad market is recovering faster than it did following the 2008 recession.

  • "In 2021, the American advertising industry is poised to regain all that it lost in 2020 and more," wrote GroupM's Brian Wieser in an analyst note last week.

Why it matters: In a recession, marketing budgets are typically the first expense cut from a company's budget. But because the government injected so much stimulus into the economy, initial fears of a prolonged consumer spending slump have subsided.

  • "Unlike the economic slowdowns of years past, the ratio of ad spending to U.S. GDP did not sharply inflect down, rather it moved up higher," media analyst Michael Nathanson wrote in a note to clients. Nathanson adds that his firm MoffettNathanson is "incredibly bullish about the years that follow. "

By the numbers:

  • In the U.S., GroupM forecasts that the the industry will grow by 15% this year, better than its prior 12% forecast. Wieser predicts that the U.S. "should end the year with 6% more activity than we saw in the last 'normal' year of 2019."
  • Globally, Magna — another advertising agency — also increased its forecasts, predicting the global ad market will increase by 6.4% to $240 billion this year — up from the 4.1% that was originally forecasted in December.

Between the lines: Beyond the general economic recovery, analysts are also optimistic that in-person activities, like sporting events, live entertainment and travel, will return faster-than-expected, driving marketing opportunities.

  • The summer Olympics, for example, is expected to drive $800m of incremental revenue this year, per Magna.
  • Magna expects that the strongest ad spend growth rates will come from the travel, automotive, beverages, and movies categories.

The big picture: The pandemic has expedited the migration from analog media to digital, and the same effect can be seen in the advertising market.

  • Digital advertising was resilient during the pandemic, thanks in large part to small businesses leaning into e-commerce, and favoring the likes of tech giants like Google, Amazon and Facebook.
  • Traditional publishers on the other hand, "barely stabilized digital ad sales," per Magna.

Yes, but: For certain industries — like the automotive sector — Wieser notes that recovery could be a bit slower, thanks to the reliance on foreign supply chains that are linked to countries that may not recover as quickly as the U.S.

Go deeper

New Zealand aims to create smoke-free generation with tobacco ban

New Zealand Prime Minister Jacinda Ardern at a December news conference in Auckland, New Zealand. Photo: Phil Walter/Getty Images

New Zealand officials announced Thursday legislative plans to outlaw smoking by making it illegal to sell or supply tobacco products to the next generation as part of a lifetime ban.

Why it matters: "People aged 14 when the law comes into effect will never be able to legally purchase tobacco," Associate Health Minister Ayesha Verrall said in a statement announcing the proposed law, part of the Smokefree 2025 Action Plan.

FDA approves AstraZeneca COVID drug for people with immune problems

Photo: Qilai Shen/Bloomberg via Getty Images

The Food and Drug Administration issued an emergency use authorization for an AstraZeneca COVID-19 antibody drug for people with compromised immune systems.

Why it matters: The drug, Evusheld, is the first antibody therapy authorized in the U.S. to prevent coronavirus symptoms before virus exposure.

Scoop: U.S. begins denying Afghan immigrants

Afghan refugees on a bus bound for temporary housing after arriving in Greece. Photo: Byron Smith/Getty Images

The Biden administration has begun issuing denials to Afghans seeking to emigrate to the United States through the humanitarian parole process, after a system that typically processes 2,000 applications annually has been flooded with more than 30,000.

Why it matters: Afghans face steeper odds and longer processes for escaping to the U.S., despite the earlier sweeping efforts by the Biden administration to assist its allies. Immigration lawyers and advocacy groups say the government has set untenable barriers to a safe haven in the U.S.