US Ad Sales Growth Projected to Be Strongest in 40 Years Amid Covid Recovery – ADWEEK

SOURCE: Mollie Cahillane | ADWEEK

 

As the U.S. continues to recover from the Covid-19 pandemic, so does the advertising industry.

In its latest quarterly report, Magna is projecting the U.S. advertising market will grow by $34 billion in 2021 to reach $259 billion, a 15% increase and the strongest growth rate in 40 years. That’s $19 billion and 9% above March’s forecast, when Magna anticipated a 6.4% growth in U.S. ad sales.

The growth is expected to be mostly driven by digital advertising (which will increase 24%), while linear will grow approximately 4%, excluding political (given that 2020 was a presidential election year). Between a fast-recovering job market, the reopening of many businesses and the return of normal sports events, Magna is predicting second quarter ad sales to grow at least 35% year-over-year.

Those increases are expected to continue into the third quarter, which should see a 13% uptick with $900 million of incremental spend generated around the Tokyo Olympics.

“As economic recovery is stronger and faster than anticipated in several of the world’s largest ad markets (U.S., UK and China, in particular) and consumption accelerates, brands need to reconnect with consumers,” Vincent Letang, evp, global market intelligence, Magna, said in a statement. “At the same time, the acceleration in ecommerce and digital marketing adoption that started during COVID, continues full speed into 2021, fueling digital advertising spending from consumer brands as well as small and DTC businesses.”

Digital advertising sales are anticipated to capture 70% of total advertising sales, an increase from the previously projected 67%, hitting $179 billion. Non-political linear advertising sales are expected to increase to $81 billion this year. Out of home will show the highest growth, gaining 11%.

 

More media mergers coming

Magna also projects that the recently announced merger between WarnerMedia and Discovery will be just the first of a new wave of media consolidations (already, Amazon is buying MGM). “Traditional media owners are moving now as they believe antitrust authorities are ready to consider market shares in the broader media market and thus approve horizontal consolidations that would have been unthinkable just five years ago,” the report said.

Following the WarnerMedia/Discovery, the top three TV ad vendors—NBCUniversal, ViacomCBS and Warner Bros. Discovery—will control 60% of the U.S. TV advertising market, but only 15% of the broader, cross-platform ad market.

Globally, Magna predicts that advertising spend will grow $78 billion in 2021, up to a new all-time high of $657 billion, following 2020’s 2.5% drop.

 

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