U.S. 2020 Ad Spending to Fall 17 Percent, Excluding Political, Amid Pandemic

Getty

On a global basis, advertising revenue will decrease by $42 billion, or 7.2 percent, to $540 billion.

U.S. advertising revenue will fall 4.3 percent this year to $213 billion, or around 17.0 percent when excluding political advertising, driven by the novel coronavirus pandemic and the resulting recession, according to the latest forecast from MagnaGlobal. 

On a global basis, media owners' advertising revenue will decrease by $42 billion, or 7.2 percent, in 2020 to $540 billion, "as advertising spending shrinks due to the severe economic recession triggered by the COVID19 pandemic," the firm, the media research arm of ad giant Interpublic Group, said in its report. 

A 16 percent decline in traditional ad sales, including the likes of TV, radio, cinema and print, will be "mitigated by the stability of digital formats," which will grow 1 percent to $302 billion," according to the firm. Linear television ad revenue will shrink 12 percent globally this year "due to the weakness of demand, the cancellation of many TV campaigns and the postponement of major sports events," it said.

For 2021, MagnaGlobal forecasts the U.S. and worldwide ad market to bounce back. "The global economy recovers and major sports events (Summer Olympics, UEFA Championship soccer in Europe) will fuel a recovery in marketing budgets and advertising spending," the firm said, forecasting global ad spending to rise by 6.1 percent to $573 billion. "Despite the forecast recovery, the global market place will remain $9 billion smaller than its pre-COVID level," it highlighted.

In the U.S., MagnaGlobal expects advertising to climb 4.0 percent, or 5.5 percent excluding cyclical events, to $222 billion. That will leave the U.S. ad market "slightly smaller" than it was in 2019 when it had reached $223 billion. "The ad market will benefit from economic stabilization and the Tokyo Olympic Games," which will account for approximately $800 million of incremental revenue, the company said. "Linear advertising sales will stabilize (+1.5 percent), while digital ad sales will re-accelerate (+8 percent)."