Media agency Zenith is forecasting a decline in U.S. TV ad spending in 2021 as audiences shrink and marketers pour their advertising dollars into digital video.
"Audiences continue to migrate online, and online video viewing is growing rapidly, even as traditional television ratings shrink again after a one-off spike when lockdowns began in 2020," Zenith said in its report. "Advertisers value online video as a means of maintaining reach while television declines, but it's an effective form of brand communication in its own right."
Zenith sees total TV spending in the U.S. shrinking 4% to $60.575 billion in 2021 from $63.4 billion in 2020. Zenith sees TV spending growing again in 2022 to $63.224 billion, but staying flat in 2023.
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Network TV is expected to rise to $15.306 billion in 2021 from $14.717 billion in 2020. For 2022, the agency sees network spending flat at $15.459 billion for 2022 and 2023.
National cable is seen edging up to $19.99 billion in 2021 from $18.408 in 2020. Cable spending is expected to be $20.190 in both 2022 and 2023.
Spot ad spending is expected to drop to $22.857 billion from $26.891 in 2020. It will rise again to $25.143 in 2022 and stay there in 2023.
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Revenue for syndication are forecast to rise to $2.432 billion in 2021 from $2.384 billion, Zenith said. Syndication revenue is seen flat for 2022 and 2023.
Zenith sees internet video/rich media spending in the U.S. climbing 40% to $34.219 billion in 2021 from $24.442 billion in 2020. The upward trajectory is expected to continue in 2022 and 2023, with spending rising to $38.667 billion and $43.308 billion respectively.
Total major media spending in the U.S. is expected to climb to $271.609 billion in 2021 from $240.248 billion in 2020. It will grow to $290.161 billion in 2022 and hit $304.501 billion in 2023.
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Looking at the ad business globally, Zenith forecasts that total expenditures will grow 11.2% in 2021, driven by exceptional demand for performance-led e-commerce advertising and brand advertising on online video.
"This year has seen a return to growth, for brands and for the ad market, fueling a significant boost for most areas of ad spend," said Lauren Hanrahan, CEO of Zenith. "Online video and other digital media have seen some of the biggest increases as audiences continue their digital migration to connected TV, streaming services, ecommerce, and social platforms. We predict this will continue, with advertisers following consumers with their investments."
Advertising expenditures will total $669 billion this year, $40 billion more than was spent before the pandemic in 2019, Zenith said. The agency expects advertising expenditures to remain robust, with 6.9% growth forecast for 2022 and 5.6% for 2023.
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"Limited supply and rising demand are stoking media inflation," Zenith said in its report. "This year's rapid recovery in ad spend, coupled with the continued migration of audiences from traditional to digital channels, is fueling substantial increases in media prices, particularly in television. The cost of television advertising is up 5% this year on average, though the variance between markets and audiences is wide. Television spending is up by 1%, so the volume of audiences reached globally is shrinking. Digital media growth, in contrast, is mainly driven by rising audiences and more extensive monetization, with online video inflation averaging 7%, and social media roughly flat, compared to their 26% and 25% respective ad spend growth rates."
Zenith predicts that online video advertising will be the fastest-growing digital channel in 2021, rising by 26% to reach $63 billion.
Overall, the agency expects digital advertising to grow by 19% in 2021, and increase its share of total ad spend to 58%, up from 48% in 2019 and 54% in 2020.
