In its mid-year forecast, released Tuesday, the company predicts total advertising spending without political ads will reach $207.9 billion. While that would be a decline of 13% from 2019, the drop would not be as bad as the 16% downturn in the financial crisis of 2009.
“That we ‘only’ expect a 13% decline is surprising,” wrote Brian Wieser, the report’s author. “We might normally expect that because the 2020 economic decline is so much worse than 2009, advertising should be much weaker.”
In an interview with Deadline, Wieser, GroupM’s global president of business intelligence, said the recovery of many businesses in recent months has been more significant than most observers had expected. However, he cautioned, everything is relative. “If you’ve been hitting yourself on the head with a hammer and you switch to a rubber mallet, it feels pretty good,” he said. “If you assumed a true retail apocalypse, with small businesses obliterated, that hasn’t quite happened.”
Retailers, restaurants and other businesses unable to operate normally have shifted to curbside pickup and delivery, helping stop the worst of the bleeding, he said.
Television, though, is finally showing signs of succumbing to long-term trends like ratings erosion and cord-cutting, Wieser said. The absence of live sports and new production has exacerbated that decline. GroupM sees total TV advertising declining by 7% to $61.1 billion in 2020, even when political advertising is counted. The drop will be even steeper in 2021 at 12%.
Even by the presidential election year of 2024, TV advertising will only see a fractional uptick to $61.3 billion, after ranging between $53 billion and $60 billion in the years in between, GroupM expects. The high-water mark came in 2016, at nearly $71 billion, including political.
National TV should decline around 11% this year, followed by 6% growth next year, the report predicts. Digital “extensions,” including ad-supported video on demand services like Hulu or Roku, “will fare much better,” Wieser wrote, dipping 3% in 2020 but bouncing back, up 15%, in 2021. “We estimate those digital extensions will amount to around 14% of total national TV spending this year. Of note, the aforementioned declines in available inventory, a continuation of the broad reduction in traditional TV viewing we saw prior to the pandemic that were perhaps exacerbated by increasing availability of non-ad-supported streaming services, could fuel inflationary conditions.”
Local TV will see the sharpest decline, which was signaled by several media companies in recent weeks as they reported first quarter financial results. (Fox Corp., which operates one of the top local station portfolios, said station ad revenue in the second quarter was on pace for 50% declines from the same period in 2019.) Local TV ads without political should fall by 34% in 2020 because of the weakness in local retail and automotive advertising, rebounding slightly next year by 10%, per GroupM. Counting $8 billion of political ads, 2020 could eke out a 1% gain.
Despite the pandemic, overall political advertising should still break records in 2020, rising to $15 billion in spending versus $8 billion in 2018. Slightly more than half of that will go to local TV, with much of that concentrated in swing states.
Digital will fare best both near- and long-term, GroupM predicts. Digital ads will decline 3% without political in 2020 and be flat when political is counted, before rebounding in 2021 with underlying growth of 12%, or 9% including political ads.