MAGNA Predicts a Roaring Recovery for U.S. Ad Market

While the ad market should be back to normal by the end of 2022 in almost all verticals MAGNA Executive Vice President of Global Market Intelligence Vincent Letang says he is astonished by how much of this recovery is driven by digitalamp160quotWe were expecting stronger digital growth but it was so much stronger than anyone expectedquot he saysDigital ad formats search social and digital video now account for 60 of all media spend At the height of the pandemic in 2020 digital video spend skyrocketed 41 It grew by over 68 in the first half of 2021 Social ad spend at the end of 2021 will index at 165 compared with preCOVID levelsThe growth in 2020 and 2021 has been entirely organic And it came from a surprising source small and medium businessesquotThey weren39t just resilient under COVID they thrivedquot says Letang quotMany of them preCOVID didn39t have a digital budget at all But a lot of them we suspect kickstarted those budgets during the pandemicquot And like many consumer behavioral changes that came about during the pandemic Letang predicts that the digital investment for smaller businesses will be a permanent changequotWe saw digital formats growing out of volume and pricingquot he adds Letang and his colleagues had previously thought the digital marketplace was reaching maturity if it hadn39t already But 2021 has proven quotthere39s still room for organic growthquotThat39s not to say that traditional ad formats are dead Linear TV national broadcast and cable will finish 2021 with 74 growth over 2020 and they will index at 95 compared with preCOVID spending by the end of 2021amp160Local TV will finish out 2021 with nearly 18 growth yearoveryear excluding cyclical spending from events like the Olympics and elections quotThe strong recovery for TV and radio shows that there39s still an appetite for traditional media and contextbased mediaquot Letang saysTwo factors are at play in linear TV39s recovery he explains The first is brand safety There39s no safer or more controlled environment than TV in which advertisers know exactly where their content will be placed as opposed to programmatic digital advertising that can sometimes place brands in toxic environmentsThe second factor relates to COVID19 Plenty of brands essentially went quiet for months during the pandemic and are looking to reconnect with consumers Letang says traditional media is a very effective way to do thatOutofhome OOH advertising took one of the bigger hits when the pandemic took Americans off the roads And while it might be tempting to write OOH off completely because of the large percentage of employers who will continue to allow remote work Letang notes that America39s car culture and renewed desire to be anywhere that isn39t the home will make OOH an attractive format once againquotIt was the only traditional media format to show consistent growth in the five to 10 years preCOVIDquot Letang says quotIt39s complicated but we are optimistic in the meantimequotPolitical advertising has permanently changed Letang points out Money that would normally have gone to inperson campaign events was primarily redirected to digital and local TV in 2020 to great effect Advertising related to political issues rather than to specific candidates is on the rise This will lead to 6 billion in incremental revenue for local TV station owners for the 2022 midterm elections Letang predictsAdvertisers in the entertainment category in cinema in particular have increased their spend well beyond expectations as blockbusters return to theaters and as consumers once again feel comfortable going to the movies and to other live events By the end of 2021 the advertising sector will index at 126 compared with preCOVID spending levels and by the end of 2022 is expected to leap further to 146Supply chain issues will continue to affect the automotive industry and its ad spend More sectors may be impacted as well in the coming months Food and beverage for example is one vertical that could see disruptionsHowever Letang cautions it39s not clear how much of the current media coverage of supply chain issues is fueled by misinformation or mere perception versus actual shortages And verticals like pharmaceuticals entertainmentamp160and restaurants won39t have the same issues as sectors that rely more heavily on the global supply chainMAGNA has more than 50 years of experience tracking the economic forces that shape the ad marketplace After 18 months of Sturm und Drang hearing Letang talk about doubledigit growth in 2022 is enough to make any marketer smileClick the social buttons to share this story with colleagues and friendsThe opinions expressed here are the author39s views and do not necessarily represent the views of MediaVillagecomMyersBizNet

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MAGNA Predicts a Roaring Recovery for U.S. Ad Market

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Oriana Schwindt

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