TV ad spend to slide under $65bn, GroupM says

Streaming services are expected to inject billions of dollars into the US ad market

For the first time since 2015, GroupM says television ad spend will total less than $65bn by year’s end.

The dip to $64.3bn in TV spend for 2019, minus political ads, shouldn’t all be attributed to the rise in cord-cutting, but instead is a symptom of larger trends impacting once-steady TV advertisers.

“The core set of advertisers that have historically driven TV spending are likely to reduce the budgets they allocate to the medium,” Brian Wieser, GroupM global president of business intelligence, wrote in the report.

Wieser told The Drum that the decline in TV spend is “more about a shift in economy than a shift in media,” as growing digital brands are more likely to advertise in their native environments, while the slowing legacy brands being disrupted evaluate their ad budgets.

“If an app developer who makes games is advertising, they’re more likely to spend in digital,” Wieser said. “At some point that app developer will spend money on TV, but they’re whole business model is oriented differently.”

By the end of the year, GroupM says digital ad spend will top $112bn. That is expected to reach $126.5bn by 2020, accounting for half of the total advertising market.

Wieser said the rise in ad-supported streaming services should partially offset the decline of spend in traditional TV for their “enhanced targeting capabilities” in the short-term.

Overall, total US ad spend is expected to grow 6.2% to $244bn in 2019. GroupM is forecasting 4% growth in 2020.

Streaming services are expected to be large spenders as they jockey for consumer attention in a crowded field.

“We expect the new and existing streaming video services to account for multiple billions of dollars in domestic advertising spending by the time these services are all operating at scale,” Wieser wrote.

GroupM extended its forecast to 2024, projecting total US spend of nearly $285bn, excluding political ads. TV spend is expected to total $60.3bn, or 21% of the total advertising market.

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