This year, media ad revenue is expected to increase by 22%, according to Group M’s U.S. Mid-Year Forecast. This is a dramatic increase over what was previously forecasted. And that’s not all. Advertising spending in 2021 is also supposed to increase by nearly 15% over what it had been pre-pandemic. That’s right: 2019. “This amounts to a 7.4% compound annual growth rate (CAGR), despite 2020’s 5.6% decline in underlying U.S. advertising growth,” says Group M.
Yes, percentages are nice, but what does this growth add up to? This year, total media company advertising revenue is estimated to amount to $279 billion. Group M also estimates that spend will keep on rising until it reaches $388 billion by 2026.
The Specifics of Advertising Spending Growth
Digital Ad Spend
Group M predicts that digital advertising, in particular, will experience a 33% increase this year. That's on top of last year’s 10% growth. Of all the advertising spending growth currently going on, digital advertising will account for 57% in the U.S. this year.
“For many years, marketers who primarily depend on traditional media, especially television, have shifted their budgets into digital media,” says Group M. “Typical allocations for such marketers may include 40% to 50% for digital media, 35% to 45% for television and the remainder spread across other media… We can expect these marketers to continue to shift their budgets toward pure-play digital media over time.” This may spell out an opportunity for you to sway your client into becoming increasingly digital in their campaigns. Their advertising spending should reflect the changing environment in their industry. It should also be based on what drives their customers to take action.
How This Affects Your Clients
Do your clients want more evidence about which types of advertising media their target audience typically responds to most? Check out their profile on AudienceSCAN on AdMall by SalesFuel. You can also show your clients how well their digital efforts and presence are working for them by running a Digital Audit on them, also available on AdMall.
By 2026, digital advertising spending is expected to not only thrive, but to outpace the overall market. Digital advertising will account for around 69% of the advertising industry by 2026. Don’t let your clients fall behind the times by staying too loyal to only traditional ads.
TV ads have remained one of the most stable forms of traditional advertising media. Group M reports that TV advertising spending is expected to remain stable for the foreseeable future. Overall, national TV (which includes connected TV, as well as advertising and linear forms of TV) ads are expected to increase by 8.7% this year. This growth means that TV advertising will make a full recovery from the 6.9% decline it experienced in 2020. Analysts suggest that businesses continue to be loyal to TV advertising especially when they need to boost brand building efforts. Additionally, TV advertisers should start focusing their efforts on connected TV, as that side of the medium is experiencing the most significant growth.
Photo: David Emrich