The COVID-19 pandemic upended marketing and advertising at many companies last year. Confronted by a historically high level of business and economic uncertainty, many marketers were forced to dramatically change their marketing plans, and in some cases at least, to substantially reduce marketing and advertising spending.
Today, the outlook for marketing and advertising is considerably brighter. As I wrote last month, many economists now believe the U.S. economy will grow (measured by real GDP) between 4% and 7% in 2021, a rate of growth we haven't seen in decades. As a result, many marketing industry forecasters are predicting that marketing and advertising spending will also grow substantially in 2021.
The Ad Agency Forecasts
Three global advertising agencies - IPG's Magna, Publicis' Zenith, and WPP's GroupM - recently published their estimates of advertising spending for 2020 and 2021. The following table shows the agency forecasts for total advertising spending in the United States. As might be expected, these agencies estimate that overall advertising spending declined in 2020, but they expect the advertising market to grow significantly in 2021.
The strength of digital advertising is clearly reflected in the agency estimates. The table below shows the estimates of year-over-year growth of spending on digital advertising in the U.S. for 2020 and 2021. All three agencies estimate that despite the COVID-19 pandemic - or perhaps because of the pandemic - digital advertising spending actually increased in 2020, and they expect the growth to continue this year.
All three agencies also estimate that spending on digital advertising will represent more than half of total advertising spending in the U.S. in both 2020 and 2021.
I should note that these estimates were published in December of last year. Therefore, they don't reflect the current level of optimism about the growth of the U.S. economy. I suspect these agencies will soon be increasing their estimates of U.S. advertising spending for 2021.
The Winterberry Group Forecast
Winterberry Group, a specialized management consultancy focused on the advertising, marketing, data, technology, and commerce sectors, issued a new forecast for advertising and marketing spending in January of this year. Winterberry divided its forecast into two major categories - offline media and online media.
The following table contains Winterberry's estimates for U.S. offline media spending for 2020 and 2021. As the table shows, Winterberry is estimating that spending fell in 2020 in every offline media category except addressable TV. The firm predicts that six of the nine offline media categories will return to growth in 2021, with the laggards being linear TV, newspapers, and magazines.
The Winterberry forecast also reflects the resilience and continuing growth of marketing and advertising via digital channels. The table below shows Winterberry's estimates for U.S. online media spending for 2020 and 2021. Winterberry is estimating that spending in five of the eight online media categories actually grew in 2020, and the firm predicts that spending in all eight categories will grow substantially this year.
What Marketers Are Saying
The latest edition of The CMO Survey provides strong evidence that U.S. marketers are also expecting a rebound in marketing and advertising this year. The February 2021 edition of the survey generated 356 responses from senior marketing leaders in the United States. Almost two-thirds (64.6%) of the respondents were affiliated with B2B companies, and 94.5% were at VP level or above. The survey was fielded January 6-26, 2021.
The survey asked participants how their level of marketing spending had changed in the twelve months preceding the survey (essentially 2020), and how they expected spending to change in the twelve months following the survey (essentially 2021).
The survey respondents reported that their marketing spending declined by 3.9% (mean of all responses) over the twelve months preceding the survey, but they expect spending to increase 10.1% over the twelve months following the survey. More specifically, the respondents expect digital advertising spending to grow 14.3% over the following twelve months, while traditional advertising spending will be essentially flat (-0.2%).
If history is a guide, it's likely that these forecasts and marketer expectations won't prove to be completely accurate on the specifics, but they are likely to capture the larger trends. Rapidly improving economic and business conditions will drive increase spending on marketing and advertising this year, and the popularity of digital methods and channels will continue to grow.
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