Ampere: Ad Market Poised for “Solid Recovery” in 2021

The latest findings from Ampere Analysis show that the negative impact of Covid-19 on TV advertising revenues began to subside significantly in the fourth quarter of 2020 in both the U.S. and Western Europe, setting the stage for “a solid recovery” in 2021.

The U.S. TV ad market saw a strong Q4, with TV ad revenue reaching $17 billion, up 38 percent on the previous quarter. All broadcasters had their best quarter of the year. This equates to a 3 percent growth compared to the same quarter in 2019, the first quarterly growth in the U.S. TV ad market in almost three years, driven by political spending.

Ampere expects the TV advertising market in the U.S. to grow by 11 percent in 2021. A highlight in the market is the high levels of sports and news viewing in Q1, which bodes well for Summer Olympics audiences.

Jack Genovese, Ampere’s senior analyst, said: “After a tumultuous first six months of 2020, the U.S. economy has shown encouraging signs of a recovery, and we expect the TV advertising market in 2021 to return to comparable levels to 2019 (i.e., before the pandemic), assuming no more lockdowns. The surge in political spending on the presidential election and the greater concentration of live sports in Q4 really boosted the last three months of the year. Nevertheless, all broadcasters except Fox experienced full-year ad revenue declines in 2020 versus 2019.

“Continued high levels of sports and news viewing into the first few months of 2021 has helped to boost broadcasters’ advertising revenue, and we expect TV advertising revenue to grow by 11 percent in 2021. However, the recovery will not change market fundamentals. As viewing continues to migrate online and the rise of AVoD shows no signs of stopping, we expect TV advertising revenue in the U.S. to revert to a long-term declining path following 2021.”

Ampere expects the Western Europe TV advertising market to see declines in Q1 2021 before showing year-on-year growth in the second quarter of the year. The extent of economic recovery will depend on the success of vaccination rollouts and the implementation of any future lockdown restrictions. As a result of a strong Q4, Ampere adjusted its market-level TV advertising revenue for FY 2020 in Western Europe from a projected decline of 16 percent year-on-year to an average actual year-on-year decline of 15 percent.

Senior Analyst Hannah Walsh said: “While Western European economies continued to recover in Q4 2020 and broadcasters achieved better financial results than expected in the quarter, TV advertising revenue in the region is yet to see full recovery from the impact of Covid-19. Overall last year, broadcasters here faced double-digit declines in total TV advertising revenue, down 15 percent on average.

“Ongoing national restrictions through Q1 2021 as well as the discovery of new Covid-19 strains across Europe will continue to have a negative effect on TV advertising revenue.

“Looking at 2021, Ampere currently expects the region to see year-on-year growth of 8.5 percent in FY 2021. Ampere does not believe Western Europe will recover to pre-Covid-19 revenue levels over the forecast period.”