After a pandemic-induced contraction of 3.9% in 2020, the US advertising market is expected to rebound to 6.2% year-over-year growth this year. So says a year-end report [download page] from GroupM, which also forecasts that this year internet advertising will account for 55% of the total US media market, ahead of traditional media such as TV (25%), print (7%), direct mail (6%), radio (5%) and out-of-home (3%).
Here’s a closer look at how each medium fared in 2020 and what revenues will look like for them in 2021. [Note: Unless otherwise stated, data excludes political advertising.]
Using an analysis of its client base, GroupM’s report estimates that the total US digital media market grew by a modest (but still somewhat impressive) 5.4% year-over-year (y-o-y), with revenue reaching $110.1 billion.
As 2020 was a Presidential election year, political ad spend had a noticeable impact on growth in some channels, one of which was internet advertising. When including political advertising, internet media revenues grew by 9% over 2019 and totaled $114.6 billion.
The forecast for 2021 shows internet ad spending reaching $130.0 billion, representing growth of 18.1% y-o-y. With political spending tapering off considerably in 2021, the data shows that when figuring in this spending, y-o-y growth is a smaller 14.1% (to $130.7 billion).
TV (including digital), like internet advertising (such as search and social), benefited from political ad spend last year to a sizable degree. This is not surprising considering that broadcast TV is thought to be the most influential platform for political advertising.
In 2020, TV ad revenue decreased by 12.3% for a total of $56 billion. However, when factoring in political ad spend (for a total of $63 billion) the decrease was considerably less (2.5%).
The new year brings refreshing estimates for TV ad revenue to reach $59 billion, up 5% y-o-y. However, when factoring in political ads the growth trend reverses, with the TV ad market projected to instead fall by 5.1%.
The US direct mail advertising market was not spared the impact the pandemic had on advertising in 2020, with signifiant losses that were nonetheless not quite as severe as other media. Dropping by 25.9% y-o-y (or by 20.7% when including political advertising), direct mail revenues totaled an estimated $11.6 billion.
As a medium that has proven results, even during the pandemic, direct mail should also see a resurgence in 2021, with spending expected to grow by 17.2% (10.3% including political advertising) from 2020 to reach $13.5 billion.
Data from Nielsen shows that the number of weekly radio listeners dipped at the start of the pandemic. Although the same data shows that this figure is well on its way to recovering, GroupM estimates that ad revenue for this medium fell by 27.1% in 2020. With political advertising added into the mix, the decrease is somewhat surprisingly only slightly smaller (26.2%).
The coming year shows predicted 6.6% y-o-y growth in radio ad revenue, to $12.8 billion. When taking into account political advertising, radio ad revenue is set to grow by 6% to just top $13 billion. Either way, the radio advertising market is not forecast to reach its pre-pandemic levels at any point in the report’s forecast period (through 2024).
Magazines and Newspapers
While magazine and newspaper ad revenues have steadily decreased each year for the past several years, 2020 exacerbated these losses. This is especially true for newspapers, which suffered a y-o-y cut of 30.3% in ad revenues (28.9% including political advertising). The decline in ad revenue is expected to continue but slow in 2021 to -12.1%, with revenue forecast to reach $7.7 billion.
Magazine ad revenue also saw larger than usual losses in 2020 (-19.8%). And, much like newspaper advertising, spending on magazine ads is expected to revert this year to declines more on a level with the years prior to 2020 (-8.3%).
After seeing dramatic y-o-y drops in ad spending in the second and third quarter of 2020, GroupM’s report estimates that, overall, 2020 out-of-home (OOH) ad revenue plummeted by 31.1% (-28.2% including political advertising) to $5.9 billion.
Recovery for OOH is to some degree expected in 2021, with ad revenue projected to reach $7.2 billion, up 22.8% (17.8% including political advertising). Pre-pandemic levels of ad spending in this medium are not expected to be reached until 2024.
The media type impacted the most negatively by the pandemic was cinema, but it’s also set to have the most sizable recovery (in relative terms) this year. With many cinemas closing after the start of the pandemic, ad revenue plummeted by 81.6% over 2019’s figures to a reported $149.4 million.
In anticipation of cinemas reopening and perhaps an influx of blockbuster films being released (Warner Bros./HBO Max aside!), GroupM forecasts an impressive 259.1% y-o-y growth, with cinema ad revenues reaching $536.5 million. Even with sustained growth throughout the forecast period (albeit at much smaller degrees from 2022-2024), cinema ad revenues in 2024 ($609.3 million) will only be about three-quarters of what they were in 2019 ($809.7 million)
The full report, including historical ad revenue data, can be downloaded here.
About the Data: Forecasts are based on “observations of GroupM’s industry-leading client base.”