Digital Ad Sales To Top Two-Thirds Of Total Spend For First Time In 2021, Magna Forecasts

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Magna’s latest forecast paints a sunnier outlook for the ad industry, which it says has recovered faster than expected from the effects of the coronavirus pandemic. Magna chalks up the improved economic outlook to the new stimulus package, the decline of COVID-19 and the return of live sports. The growth rate would be an even more impressive 8.6% when neutralizing for the impact of cyclical ad spending on election ads and the Olympics in both years. 

While the rising tide should lift all channels and formats, social media, digital video, search and out-of-home could see double-digit growth, compared to low to mid-single-digit growth for national TV and radio. Digital ad sales are expected to grow by 13% to $161 billion, surpassing two-thirds of total ad sales for the first time.

Magna’s forecast of a large quarterly increase in Q2 2021 reflects the historically low figure from a year ago, when the pandemic first affected the ad market and economy at large. The relatively smaller increase expected for Q4 this year is in comparison to a relatively strong Q4 last year, when political spending and record holiday sales boosted the advertising sector. The Q3 forecast for this year includes $800 million in incremental revenue related to the summer Olympics. 

The expected increase in spending by travel and automotive industries is in line with the evolving behaviors of consumers, who are able to move more freely as vaccines rollout and who have seen some benefits from the stimulus package and improved economy.

Magna also released its final estimates for U.S. media owners’ net ad revenues in 2020, which were essentially stable at $226 billion with a 1% growth rate. This is even more resilient than previously expected, buoyed both by historic political ad spending and the double-digit growth of digital advertising due to a surge in e-commerce and digital marketing by national brands and local firms. Facebook, Google and Amazon grew ad revenues by 17% to reach a market share of 82%, while other digital players grew by 27% and traditional media and independent publishers “barely” stabilized ad sales, per the findings. 

Credit: Marketing Dive

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