GroupM Forecasts $10 Billion Spending on Political Advertising in 2020

GroupM is forecasting U.S. advertising to grow 6.2 percent in 2019 to $244 billion, with 4-percent growth next year.

According to the This Year Next Year: U.S. Media Forecasts report, 2019 will mark a fourth consecutive year of solid mid-single-digit growth for the industry on an underlying basis.

“We expect some softening next year as the economy reverts toward normalcy after a period of growth likely supported by factors including the 2017 domestic tax cut, an expanding federal deficit and low interest rates,” GroupM says. “As the effects of these fade, heightened trade barriers should concurrently become a drag on the overall economy. The 2020 Olympics also likely provide some marginal benefits, although we note that it can be difficult to identify the degree to which Olympic activity captures spending that would already have occurred or if it causes incremental spending to flow into the advertising market.”

Digital-first marketers are likely driving much of the industry’s recent growth, the report finds. GroupM points to Facebook, Amazon, Netflix, Alphabet, eBay, IAC, Uber and Booking.com as eight companies that are likely to spend more than $30 billion on advertising globally this year. Most of this spending will go into the U.S.

“Overall, our best ‘feel’ for the advertising market is to forecast a lower growth rate beyond 2021, and we incorporate a 3-percent expectation for subsequent years,” the report states.

TV advertising is “soft” as 2019 comes to a close, expected to end the year with a 7-percent decline, falling to $65 billion in ad revenue. Excluding political, underlying television advertising is trending toward a low-single-digit reduction during 2019. National TV advertising will be closer to zero, or even up very slightly, while local is down by low-single-digits.” We expect this declining trend to persist, even with new forms of premium TV advertising regularly emerging,” GroupM says. “Certainly the ad-supported SVOD services will be attractive environments and their enhanced targeting capabilities will also appeal to advertisers. They will partially offset the ongoing erosion of traditional TV’s reach and frequency, but the core set of advertisers that have historically driven TV spending are likely to reduce the budgets they allocate to the medium.”

Political advertising is expected to be $10 billion or more.