While the advertising market has started to show signs of life after being decimated by Covid-19 in March and April, the pandemic will continue to affect the bottom line well into next year.
This year’s ad spend will fall 20% compared to 2019—though digital ad spend in the second half of 2020 will be up 13% year over year, according to a new Interactive Advertising Bureau survey of 148 media buyers, planners and brands about how the pandemic will continue to affect ad spend.
Linear ad spend is projected to be flat in the third quarter and down in the fourth quarter, while agencies expect to increase their connected TV and OTT investment by 46% year over year.
Most buyers said they will increase digital channel spend in the second half compared to 2019, and 59% indicated they would up their CTV/OTT spends year over year, while 54% will spend less on linear.
More specifically, buyers estimated they will spend 25% more in CTV/OTT in the third quarter compared to last year, while fourth quarter spend will be up 27%. Meanwhile, third quarter linear ad spend is expected to be flat year over year, but will drop 6% in the fourth quarter.
With many businesses still sidelined by the pandemic, many buyers said their 2020 and 2021 budgets remain in flux. Currently, 49% of buyers surveyed said they are confident that their budgets are stable for the rest of 2020, but only 41% could say the same about their 2021 budgets.
And despite the ANA’s call last week for the entire marketplace to switch from a broadcast to a calendar upfront, survey respondents said they won’t be changing their broadcast upfront allocations in the coming year, which will remain steady at 33% of their overall video ad spend. Calendar year allocation is slightly down, from 37% historically to 36% this year, with scatter allocation rising from 29% to 32%.
With NewFronts looming next week, nearly half of buyers, 49%, say they would like the NewFronts and upfronts to merge, indicating that a union would give them a better grasp of cross-screen measurement and research.
The new IAB survey follows a new ad forecast from Magna Global, which found that total media owner ad revenues in the U.S. (among linear and digital properties) will decrease to $213 billion in 2020 from $224 billion in 2019.
Overall, according to Magna’s forecast, the ad market in the U.S. is projected to stabilize in the third quarter and recover in the fourth quarter. The U.S. ad market is now expected to rebound in 2021, with a 4% gain.
This morning, GroupM released its mid-year forecast, projecting a 13% decline in U.S. advertising this year, followed by a 4% growth next year, excluding political advertising. With political advertising included, advertising will drop 8% this year and 1% in 2021.
GroupM forecasts that total TV advertising will fall 7% in 2020 and another 12% next year.
In the IAB’s first buyers survey following the pandemic, conducted in March, buyers said linear ad spend would plummet about 41% in March and April, and 35% in May and June. Additionally, buyers expected to spend 20% less in this year’s upfront marketplace than they had originally planned.