Television ad sales will benefit from an economic recovery that is stronger than previously forecast, according to media buyer Magna, which also sees further consolidation in the U.S. media industry.
National TV ad sales are expected to grow by 5% to $38 billion in 2021, according to a new forecast from Magna, part of IPG’s MediaBrands unit.
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Magna said national TV will be helped by stronger pricing and incremental spending around the Tokyo Olympics. The growth is being reflected in what appears to be a hot upfront market for network television.
Local TV will benefit from the recovery of the auto industry, with non-political ad sales up 10%.
Traditional media owners’ cross-platform ad sales will grow by 5% in 2021, with total television ad revenue up 6%, including a 25% increase in long-form AVOD.
The overall U.S. market will grow 15% to a record $259 billion. Magna said that is the biggest growth rate in 40 years. This new forecast is 9 percentage points higher than Magna’s previous forecast made in March.
For 2022, Magna expects the U.S. ad market to grow 8% to $280 billion. That’s 2 percentage points higher than the forecast in March.
“Marketing activity and advertising spending will be fueled by strong consumption, a fast-recovering job market, the reopening of many businesses (restaurants, theaters, amusement parks…) and the return of normal events and sports schedules, plus the Olympics,” Magna said.
Digital ad sales in the U.S. will be up 24% to $179 billion, representing nearly 70% of total ad sales, and non-political linear sales will be up 4%.
Magna notes that because linear ad sales still represent the bulk of ad revenue for traditional media owners, there will be a wave of consolidation in the media industry aimed at competing with digital media players.
“Traditional media companies have no choice but to grow in scale, in order to compete with digital media giants, and invest in cross-platform advertising solutions,” Magna said.
“The U.S. TV market remains relatively fragmented following the merger of Warner and Discovery: The top three TV ad vendors (currently NBC, ViacomCBS and Warner/Discovery) will control just 60% of the U.S. TV advertising market, compared to 90%+ for the top three broadcasters in most other advanced markets,” according to Magna.
On a global basis, Magna expects advertising spending to grow 14% to a record $657 billion in 2021 following a 2.5% decline in 2020. For 2022, Magna is forecasting another 7% increase.
Keys to growth in 2021 include an overall economic recovery that benefits big ad spending categories, including automotive and entertainment, gains in digital marketing and international sports events, such as the Olympics and UEFA Euro.
Most of the growth in ad spending will come in digital, up 20% to $419 billion, accounting for 64% of total ad sales. Linear ad sales will gain 3% to $238 billion.
Countries showing the most growth include China, up 16%, and the U.K., up 17%.
“As economic recovery is stronger and faster than anticipated in several of the world’s largest ad markets (US, UK and China, in particular) and consumption accelerates, brands need to reconnect with consumers,” said Vincent Létang, executive VP, global market research at Magna. “At the same time, the acceleration in ecommerce and digital marketing adoption that started during COVID, continues full speed into 2021, fueling digital advertising spending from consumer brands as well as small and DTC businesses. This unique combination of cyclical, organic and structural drivers will lead to the strongest advertising annual growth ever monitored by Magna.”
