TV Ad Revenue in 2020 Seen Declining 18%; Radio More 'Bleak'
Bullish projections of TV advertising revenue for 2020 show a 4% decline for 2020, while bearish predictions go as low as an 18% decline, said S&P Global analyst Seth Shafer in a teleconferenced presentation for the 2020 Kagan Media Summit Thursday. This was the second half of the summit, the first half was last week (see 2006180053). The current downturn has much more uncertainty than previous recessions because no one can be sure about a second wave of COVID-19 or when businesses will reopen, said NBC Spot On Senior Vice President-Business Development Shawn Makhijani on another panel.
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Radio predictions are more “bleak,” ranging from a 12-23% decline, Shafer said. BIA Advisory Services predicted a 10.7% decrease in 2020 radio local ad revenue. Digital ad revenue is expected to grow 3.7% in 2020, but grew by roughly 20% in 2018 and 2019, he said.
Data shows that after previous recessions, it took years for TV and radio ad markets to return to their previous levels, Shafer said. It took four years to recover after the recession in 2001, and a decade to bounce back from the 2007 “great recession,” he said. In previous recessions, large advertisers didn’t cease commercials, but focused their buys on digital, TV and radio, Shafer said: “Not all formats recovered equally from the great recession.”
Makhijani and TVB CEO Steve Lanzano said they're already seeing some recovery in certain ad sectors, though they conceded there’s uncertainty about a second COVID-19 wave. Lanzano said he has seen an uptick in legal advertising and do-it-yourself spots, and some signs for optimism in auto commercials. Makhijani said industries such as travel are likely to remain depressed for a while, but NBC is on track to be down only 5% by Q4, and up to pre-COVID levels by Q1 2021. “I think people are going to learn how to live in this new normal,” he said.
Lanzano said if there is a second wave, the U.S. and advertisers will be better prepared for it than they were the first time. There are “too many uncertainties” to give guidance on how a second wave would go, he said. As an example of the difficulties of projections during the pandemic, Shafer cited sports leagues that are planning to return to hold games. That would be a boon for broadcasters but would also likely be instantly derailed if a player tested positive for COVID-19 Shafer said.
Lanzano and Makhijani said they still expect political ads to be robust, especially with more local races becoming more competitive in recent weeks. Political spots are traditionally bought at the last minute, but Makhijani said he has been seeing big orders for digital marketing placed well ahead of time.
Lanzano said the boom in broadcast news viewing caused by the pandemic may not go away when the threat lessens. When viewer habits change, it's difficult for them to change back, he said. Whatever the COVID-19 “new normal” becomes, it's likely to include an increase in working from home, Makhijani said: “People working from home are going to watch more TV."