The United States advertising market is inching up to the quarter-trillion dollar mark.
Total ad spend in the United States will reach $244 billion this year, a 6.2% bump from 2018, according to GroupM’s annual media forecast.
That’s a very strong growth rate – the highest since 2000 – but it could also be the high-water mark as the advertising tide starts to recede. GroupM’s forecast for 2020-2024 is for US ad growth to hover between 2% and 4%.
Advertising growth in the past few years outpaced the general economy, which has decelerated, said Brian Wieser, GroupM’s global president of business intelligence. Even if there isn’t a full-blown recession (the 2008 financial crisis precipitated a 15% plunge in ad spend), he said the recent ad growth rate is unsustainable.
Advertisers may be on tenterhooks about the economy, but television is already steadily dropping. In 2019, television ad spend in the United States dropped 2% (not counting political ads, which muck up year-over-year tracking because of the four-year cycle surges).
“Despite advances in traditional TV advertising, there’s not a lot to persuade me that the medium grows again, ever,” Wieser said.
There are optimistic data points, however.
By ignoring old-school media channels like direct mail and directories, the US ad growth rate climbs to 7.6% this year. So certain categories, particularly digital media, could see lasting growth rates even if the overall advertising market crumbles.
The growth of the advertising market in the past year has also been driven by a handful of large internet brands. Facebook, Amazon, Alphabet, eBay, IAC, Uber and Booking.com will spend more than $30 billion globally on advertising this year, mostly in their US home market, according to GroupM data.
It isn’t unprecedented for the 10 or so top advertisers in a category to make up so much of the market, Wieser said. The top eight auto brands had a higher concentration of overall TV advertising at their zenith, he said. But what’s new about tech brands is their growth rate, with advertising up 25% or more year after year, and with little to no growth in other sectors.
Many of the largest tech companies also own media, meaning that ad dollars go back into their own coffers and support their own ad inventory rates. That’s a big difference from auto brands that have to buy ads and try to recoup profits in car sales.
Outdoor advertising has also been a bright spot, with spend up 8% to $8.3 billion in 2019.
The out-of-home category is relatively small so it doesn’t need huge budget increases to sustain growth rates, Wieser said. But it’s the fastest growing “traditional” medium, as radio remains flat and print evolves (aka shrinks) into niche advertising.
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December 03, 2019 at 09:19PM
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GroupM Sees Highest Ad Spend Growth Rate Since 2000. Can It Last? - AdExchanger
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