Even after the wave of political spending peaks, 2020 is expected to see growth of 4%, the agency predicts in a report it released Tuesday. Overall spending has posted mid-single-digit growth in each of the previous three years.
Despite the overall uplift, spanning outdoor, direct mail and every other category, TV advertising is “soft as we close 2019,” GroupM determined, “and will end the year with a 7% decline.” Excluding political, TV ads will drop 2% to $65 billion.
“We expect this declining trend to persist, even with new forms of premium TV advertising regularly emerging,” the report said. In spite of the headwinds, the advertising story has been “robust relative to the general economy, which is generally decelerating on an underlying basis,” the report noted.
Brian Wieser. who wrote the report for GroupM, sees the streaming wars providing some boost, especially with services like NBCUniversal’s Peacock and WarnerMedia’s HBO Max planning ad-supported elements. “Certainly the ad-supported SVOD services will be attractive environments and their enhanced targeting capabilities will also appeal to advertisers,” Wieser wrote. “They will partially offset the ongoing erosion of traditional TV’s reach and frequency, but the core set of advertisers that have historically driven TV spending are likely to reduce the budgets they allocate to the medium.”
Digital companies, notably, remain some of the biggest spenders in the ad game. Facebook, Amazon, Netflix, Alphabet, eBay, IAC, Uber and Booking.com are all likely to spend more than $30 billion on advertising this year, GroupM estimates, most of it in the U.S.
“If we add in the next tier of digital endemics that may not have existed even a decade ago at anything like their current scale—think Wayfair, Chewy.com or any of the dozens of other digitally oriented companies spending hundreds of millions of dollars on advertising annually at this point in time—it’s not hard to imagine additional percentage points of growth emerging from these types of marketers,” Weiser wrote.
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