Olympics, U.S. Elections, the NFL Spark Ad Spend Growth in 2020
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- Events boost ad spend growth 3.9% globally and 3.8% in the U.S. in 2020, up from 2.6% and 3.1% respectively.
- Addressable TV and voice assistants breathe new life into old formats.
January 22, 2020 — Ad spend is forecasted to increase 3.8% in the U.S. and 3.9% globally thanks in part to the U.S. Elections, the Olympics and a resurgent NFL. This means an additional $23.3 billion of advertising dollars will be flowing globally and $8.5 billion in the U.S.
The biggest beneficiary will be digital which is set to grow at a double-digit rate (11.2%). This will be fuelled by massive spending in mobile. In fact, three-quarters of digital ad dollars are predicted to be spent on mobile in 2020. Within the mobile space, growth is driven by display and search, due to the increasing amount of mobile commerce. At the same time, U.S. digital video spend is expected to grow (15.8%) due to more advertisers looking to invest more dollars into social video.
Traditional channels will see a boost due, in part, to continued innovation. TV is expected to grow by 1.3%, driven by the Tokyo Olympics and the presidential election. With the expectation of a heated presidential election, driven by spending of two billionaires, along with primaries and state-wide races, political spending is forecasted to be unprecedented in the local marketplace. It is estimated that local political spending will be between $6 to $9 billion in 2020 (73% in traditional media of broadcast TV, cable and radio and 27% digital video).
Meanwhile OTT services will have the highest increase in spend, and growth potential, as new players like Peacock and Quibi enter the market. Peacock, for example, will launch in April in nearly 23 million ad supported homes and be in 30-35 million homes by the end of 2023.
Addressable TV advertising has grown rapidly, reaching $2 billion in 2019 in the U.S., an increase of about 30%. It now accounts for between 1-2% of the total linear TV advertising market and is expected to account for 10% by 2023 locally. With analysis showing that viewers watching addressable ads on TV are a third less likely to switch channel during an ad break, marketers are quickly appreciating the benefits that addressable TV can offer.
Overall radio is forecast to grow 2.3% in the U.S. Network audio spend is up 6% largely due to increased spending from CPG, Insurance, Pharma, and less traditional companies such as Amazon, Audible and Zillow. Digital audio (12% of total radio spend) is up with an assist from podcast spending.
With the number of voice assistants worldwide expected to double by 2023, increasing radio traffic—and with it, increasing radio ad spend—this appears to be a long-term trend.
Out-of-home is seeing a boost as well thanks to digital. It is expected to grow 2.4%. Digital out-of-home, thanks to VR and facial recognition, is expected to make up around 30% of the mix.
And, lastly, print (newspapers and magazines) are expected to see declines of -8% in the U.S.
Doug Ray, Chairman Media, Dentsu Aegis Network, U.S., said:
“2020 poses an interesting moment for the U.S. media landscape. We’ve got the benefit of significant tentpole events, including the elections and the Olympics, driving ad spend. At the same time, we are seeing the traditional channels TV, radio and OOH transform before our eyes—quickly.”
Marketers will have the benefit of leaning on tried-and-true methods of reaching their target audiences augmented by the growth of OTT and addressable TV as well as the renaissance of audio and OOH. We expect to see a great deal of testing, learning and succeeding as marketers find new and powerful ways to win, keep and grow their best customers.”
Figure 1: Growth in global advertising spend 2019-21f
| Year-on-year % growth at current prices | |||
| 2019a* | 2020f | 2021f | |
| GLOBAL | 2.6 (3.6) | 3.9 (4.1) | 3.3 |
| NORTH AMERICA | 3.2 (3.2) | 3.8 (3.7) | 2.8 |
| USA | 3.1 (3.1) | 3.8 (3.6) | 2.8 |
| CANADA | 5.4 (5.3) | 5.5 (5.7) | 3.9 |
| W . EUROPE | 2.2 (2.8) | 2.6 (3.1) | 2.4 |
| UK | 6.1 (6.3) | 6.0 (6.6) | 6.3 |
| GERMANY | -1.1 (0.4) | -1.5 (0.5) | -1.2 |
| FRANCE | 5.0 (3.6) | 5.1 (3.0) | 4.5 |
| ITALY | -1.6 (-1.6) | -0.1 (0.6) | -0.6 |
| SPAIN | -1.0 (0.5) | -1.3 (0.4) | -1.6 |
| C&EE | 4.4 (4.9) | 5.1 (5.6) | 5.1 |
| RUSSIA | 4.4 (4.5) | 5.7 (5.8) | 5.6 |
| ASIA PACIFIC | 2.3 (4.0) | 4.2 (4.9) | 3.6 |
| AUSTRALIA | 1.8 (1.9) | 3.8 (3.2) | 2.7 |
| CHINA | 3.1 (5.4) | 5.6 (6.9) | 5.0 |
| INDIA | 9.4 (11.4) | 10.9 (12.2) | 12.0 |
| JAPAN | 1.2 (1.2) | 2.0 (1.8) | 1.0 |
| LATIN AMERICA | 5.4 (9.1) | 9.5 (6.1) | 6.3 |
| BRAZIL | 4.0 (8.8) | 8.9 (4.5) | 3.4 |
| Figures in brackets show our previous forecasts from Jun 2019 *2019 actuals are based on Nov 2019 figures |
Figure 2: Share of global ad spend by media, 2019-21 (% y-o-y)
| Global year-on-year % growth at current prices | |||
| 2019a* | 2020f | 2021f | |
| Television | -1.8 (-0.1) | 0.6 (0.6) | 0.0 |
| Newspapers | -8.5 (-7.7) | -7.1 (-6.6) | -10.2 |
| Magazines | -7.4 (-7.4) | -6.3 (-6.0) | -11.5 |
| Radio | -0.3 (1.7) | 1.7 (0.6) | 0.8 |
| Cinema | 9.7 (6.1) | 5.0 (5.9) | 4.8 |
| OOH | 1.5 (4.3) | 2.4 (3.9) | 2.5 |
| Digital | 11.2 (11.5) | 10.5 (11.0) | 9.5 |
| Figures in brackets show our previous forecasts from Jun 2019 *2019 actuals are based on Nov 2019 figures |
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Part of Dentsu Inc., Dentsu Aegis Network is made up of ten global network brands - Carat, Dentsu, dentsu X, iProspect, Isobar, mcgarrybowen, Merkle, MKTG, Posterscope and Vizeum and supported by its specialist/multi-market brands. Dentsu Aegis Network is Innovating the Way Brands Are Built for its clients through its best-in-class expertise and capabilities in media, digital and creative communications services. Offering a distinctive and innovative range of products and services, Dentsu Aegis Network is headquartered in London and operates in 145 countries worldwide with more than 47,000 dedicated specialists. www.dentsuaegisnetwork.com