Despite dismal ad sales in the first half of 2020, the upcoming flood of political ads should ignite a recovery that will lead into a positive 2021, according to a new report.
Total ad sales in the U.S. fell by 7.2% in the first half of the year, according to the latest Magna U.S. Advertising Forecast. The one silver lining was the 5.7% growth in digital media sales, even as linear media, encompassing broadcast, radio, print and out-of-home, posted a 23.1% decline.
“Media consumption is really, at the end of the day, what prompts advertisers big and small to pick one channel over another. Dollars go where eyeballs go,” says Vincent Letang, Executive Vice President and Managing Partner at Global Market Intelligence, and author of the updated September forecast.
Magna predicts that next year normal life will make a gradual return, which should stabilize the ad industry and encourage media buys, especially in sporting events.
“All the key verticals are down this year, but we think eight of the top 10 will recover to a degree next year,” Letang says of total ad spend.
Magna predicts that finance, entertainment, technology and restaurant verticals will experience the healthiest ad spending recoveries next year, seeing increases as high as the low double digits. The struggles of the automotive and travel industries are expected to continue next year.
Ad spending will surge in the second half of 2020 as both Democrats and Republicans spend unprecedented amounts for political advertising going into November’s elections.
This is expected to be a record-setting year for political at $5 billion, which would be a 32% surge beyond the 2016 presidential campaign. Adding to the ad spend is former New York City Mayor Mike Bloomberg’s promise to spend $100 million to help Democratic presidential nominee Joe Biden in Florida. Local TV stations, which saw airtime buys fall sharply earlier this year, should be the biggest beneficiaries.
“For local TV, typically, in September or October, if it wasn’t an election year, they would run more commercials for local car dealers and retailers and so on,” Letang says. But, “up to 30% of commercials will be political in some areas [of the country].” The heaviest concentrated political ad spending will likely be in the swing states of Florida, Wisconsin, Michigan and Arizona.
With the late-year political ad push, 2020 should see a net decline of only 4.6%, according to Magna.
Magna said digital advertising’s strength, at 55% of the total U.S. ad market, would soften the recession’s blow to the industry.