Politicians Helped Soften the Blow for Ad Industry

The advertising industry had a massive influx of cash these last few months thanks to politicians. No, it wasn’t an industry bailout, but an estimated $12-14 billion in campaign spending. That, plus a spike in e-commerce thanks to shoppers stuck at home, means 2020 won’t be quite as awful as it might have been for the industry.

“It’s no secret that advertising took a significant hit,” write Larissa Faw and Steve McClellan in MediaPost, “but as the new spending forecasts below indicate, the impact was softened somewhat by the massive influx of US political dollars—estimated between $12 billion and $14 billion—and the acceleration of digital spending, as e-commerce soared in response to far greater activity by home-bound shoppers.”

They continue, “the overall decline in global ad spending was in the mid-single digits, compared to the double-digit plummet experienced in the second quarter shortly after lockdown orders were imposed throughout much of the world.”

The mantra we keep hearing is “it could have been worse.” Global ad decline overall will come in between 5-6% for the year, according to GroupM.

“The good news: GroupM expects a healthy rebound in 2021, when global spending is expected to grow 12.3% to a little over $649 billion on an underlying basis. Factoring in US political ad spend, the growth would be about 10%, to $651 billion,” the article notes.

While a highly divisive and contested election wasn’t anyone’s idea of a good time during a pandemic, it helped keep the ad industry from the 12% plummet predicted earlier this year … and the rebounds could be stronger because of this.

Interestingly, the forecast for “digital extensions” (digital advertising associated with traditional media) is positive; digital extensions could come in at 16% of ad spend on traditional media in the next three years.

Overall, as news of vaccines helps bolster the economy, the article states that 2021 “should be significantly better with US advertising up 4% assuming no disruption in current COVID-19 vaccination timetables, cyclical sports like the Olympics and the economic recovery predicted by economists actually takes place (3.9% growth in GDP).”

Folks, let’s not kid ourselves; it’s going to be a long winter for the US economy, but there are signs of life ahead. Staying flexible will be absolutely key in 2021. Keep innovating and building your brand into a viable platform for ad partners, while keeping your audience’s needs first and foremost.