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2020 Advertising Spending Growth Predictions

November 6th, 2019   ||    by Oriana Schwindt

A number of factors are currently muddying the waters when it comes to predicting 2020 advertising spending growth. The 2020 elections in the US are already driving massive political ad spend, according to The Wall Street Journal. This coming summer, most Americans will at some point watch at least some of the Summer Olympic Games in Tokyo, if historical viewership is anything to go by, according to The Hollywood Reporter.

But there are also fears of a looming economic recession, which typically shrinks ad budgets. So, what will the next year of advertising spend really look like?

The Summer Olympics Will Be Big

Hundreds of millions of Americans tune in to the Summer Olympics every four years. Advertisers budget for the Olympics years before they even begin, and sponsorship deals can last for several Games.

NBC Universal is expecting more than $1.2 billion in ad sales for the 2020 Games, according to Variety. That $1.2 billion was the company’s haul for the 2016 Rio Games.

Although ratings for the Rio Games were not what they were for London in 2012, NBC’s Olympic ad sales team believes the time zone quirk of Tokyo’s morning corresponding to America’s evening hours will raise viewership.

But because most advertisers have planned for the Olympics, the variability that comes from a massive budget-eater like the Olympics—which only appears on a single family of networks—is contained.

The Political Advertising Landscape Could See Massive Growth

Nowhere is 2020 advertising spending growth more clear than in this sector.

This is the $6 billion to $10 billion gorilla, depending on which forecast you look at. Kantar Media predicted $6 billion, while GroupM predicted $10 billion, according to Forbes. If GroupM’s forecast bears out, that would be a jaw-dropping 59 percent increase from the 2016 election.

This will certainly be a hotly contested presidential election. A crowded Democratic field will take still longer to be whittled down, and several states will have contentious local elections.

There is, however, a finite amount of commercial space available, particularly on local TV news. Per Kantar, 43 percent of local news inventory in battleground states went to political ads in 2016.

Depending on who’s running the ads, that could be a big windfall or not to local stations: Political candidates themselves get to pay the lowest market price for ad spots, while PACs and other organizations not directly affiliated with the candidate can be charged premium prices for desirable ad space.

What About the Recession?

Hold on, aren’t we supposed to be headed into a recession?

The consensus is, yes, an economic slowdown is on the way, per Business Insider.

But MAGNA Global‘s annual ad spend forecast indicated that even with those economic headwinds, the market can expect an extra $6.2 billion in ad revenue, growing the global total 5.8 percent, to $233 billion.

That doesn’t mean there are no worries at all. MAGNA’s report concluded that the automotive, movie studio, personal care, and retail segments will all decrease spending in the next year, and that national TV revenues will decline 2.6 percent (excluding cyclical events like the elections and Olympics).

But TV advertising has always been a cyclical beast. The story of 2020 advertising spending growth is right in line with that.

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