Encouraged by the steady rollout of COVID-19 vaccinations and the prospect of herd immunity to the virus, Moody’s Investors Service predicted that total advertising revenue growth could top 6% this year.
In a note to clients Monday, Moody’s senior VP Neil Begley wrote that the quick pace of the vaccine rollout could provide “multiple paths to a recovery for the subsectors of the media and entertainment industry.”
Moody’s noted that ad revenue fell nearly 4% in 2020, dominated by the pandemic that forced most American to remain in their homes. As a result, GDP dipped almost 4% as well.
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While Begley warned the recovery might be inconsistent across different areas of the country, he nevertheless expected a strong rebound.
“Where confidence, employment and economic activity grows more quickly because of mass vaccinations, we expect advertisers to spend heavily to attract pent-up demand for many products and services,” Begley wrote, adding that digital advertising platforms, broadcasters and networks should benefit the most.
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The movie business was decimated by the pandemic -- Moody’s estimated that domestic box office in 2020 was about $2 billion, compared to $12 billion in 2019. But after a shutdown in production, Begley wrote that “studio pipelines are as full as they have ever been and ready to fill the void once theaters can reopen at reasonable levels. Broadcast networks and stations may have a harder go at it," he wrote, because of a longer production hiatus.
“Production did resume in a limited fashion by the fourth quarter, but the content pipeline is not likely to be filled to normal capacity until production returns to a more normal level,” he wrote. “So the speed of vaccinations is imperative for the industry.”
