Looking into their crystal balls, a couple of ad industry analysts have come up with intriguing projections for what 2020 holds. Michael Nathanson, of MoffettNathanson believes TV media companies have great opportunity. Brian Wieser, Group M, cautions that with a possible recession looming, businesses need to look for the right opportunities to grow their ad budgets and revenue. Here’s what you need to know.
TV and Digital Diverge
Major advertisers continue to spend on TV messaging because the media format provides brand safety and reach. In Nathanson's analysis of ad spending growth between 2010 and 2018, he notes that digital increases were much higher than TV increases. But he doesn’t believe all of the digital budgets came at the expense of what would have gone to TV. “We continue to believe that the long tail of small and medium-sized business is bringing new ad dollars into the market, fueling digital’s growth without eating into TV ad budgets,” he says.
However, clouds may be gathering on the horizon. At least 25% of the TV ad market is fueled by retail and automotive businesses. In the past year, these sectors have cut marketing spending at the national level: retail by 7% and automotive by 10%. Sooner or later, local ad markets will feel the impact of those cuts.
At the same time, leading economic indicators are pointing to a softening in the economy. In particular, retail sales growth has not exceeded 3.4% this year. That figure is significantly lower than the 2018 retail sales growth of 4.8%. This slowing growth could impact ad industry growth. Brian Wieser remarks that “advertising growth is looking neutral to negative vs. last year’s levels with recent trends likely to continue.”
Will a slowing economy impact ad spending at the local level? Nobody knows for certain. But it’s a good idea to plan ahead. Talk with your clients about how they plan to adjust their message if the economy slumps. As Wieser suggests, emphasizing product value to consumers is a good approach. Your clients might also need to appeal to a new audience to grow revenue, or they might need to adjust their media mix.
To help them get a solid understanding of who’s buying their products, check out AudienceSCAN on AdMall by SalesFuel. With over 1,400 profiles in the database, you’ll be certain find the information you need to counsel your clients.