S&P Global Ratings Cuts Its 2020 U.S. Advertising Forecast In The Face Of COVID-19 | S&P Global Ratings
S&P Global Ratings Cuts Its 2020 U.S. Advertising Forecast In The Face Of COVID-19 | S&P Global Ratings: COVID-19 Reverses What Would Have Been A Solid Advertising Year In 2020
The impact of the COVID-19 pandemic to domestic advertising will be severe in 2020, with the worst quarters being the second and third. However, the breadth and depth of severity will vary for each media subsector. Sectors that depend on short cycle advertising, for which ads are placed very close to broadcast and can be cancelled quickly, have already experienced steep advertising revenue declines. These sectors include those dependent on programmatic digital advertising (which is every media sector, to some degree), radio, and outdoor transit. In addition, sectors with somewhat longer lead times (measured in weeks), such as local television, are also starting to see declines, especially in forward bookings. Local TV, radio, and outdoor face longer-term issues, even when we eventually head into a recovery because of their dependence on local businesses for advertising. Many small and medium-sized businesses will undoubtedly fail during this crisis. Over the next month, national television, already facing ad losses due to the postponement or cancellation of high-value sports events, faces a further pullback in advertising as both the scatter market weakens and advertisers seek to either cancel or shift already committed ad spending.
The rate at which these subsectors recover will also depend on the health of the advertisers. Advertisers in the travel sector, hotels, cruise lines, film, theme parks, and other sectors dependent on consumer interactions, will recover more slowly as social distancing policies may stay in place longer and consumers' reluctance to take part in group events or activities may take time to overcome.
Table 2
S&P Global Ratings Revised 2020 U.S. Advertising Revenue Forecast
Media Sector Previous (Jan. 2020) (%) Change (%) Revised (March 2020) (%)
Digital 11.5 (13.5) (2.0)
Local television (incl. political) 9.3 (11.3) (2.0)
Network television 6.4 (12.4) (6.0)
Cable television 1.5 (9.5) (8.0)
Local political advertising ($ mil.) 3,050.0 0.0 3,050.0
Total television 5.0 (11.0) (6.0)
Radio (1.5) (15.0) (16.5)
Outdoor 3.3 (16.3) (13.0)
Magazines (10.0) (15.0) (25.0)
Newspapers (15.0) (15.0) (30.0)
Direct mail (2.0) (18.0) (20.0)
Advertising, excluding Digital 0.4 (13.9) (13.5)
Total advertising 5.3 (14.0) (8.7)
U.S. GDP growth 1.9 (3.2) (1.3)
U.S. consumer spending 2.4 (3.8) (1.4)
Note: Both cable and network TV estimates had included the 2020 Summer Olympics, which has now been moved to 2021. Source: S&P Global Ratings estimates.
The impact of the COVID-19 pandemic to domestic advertising will be severe in 2020, with the worst quarters being the second and third. However, the breadth and depth of severity will vary for each media subsector. Sectors that depend on short cycle advertising, for which ads are placed very close to broadcast and can be cancelled quickly, have already experienced steep advertising revenue declines. These sectors include those dependent on programmatic digital advertising (which is every media sector, to some degree), radio, and outdoor transit. In addition, sectors with somewhat longer lead times (measured in weeks), such as local television, are also starting to see declines, especially in forward bookings. Local TV, radio, and outdoor face longer-term issues, even when we eventually head into a recovery because of their dependence on local businesses for advertising. Many small and medium-sized businesses will undoubtedly fail during this crisis. Over the next month, national television, already facing ad losses due to the postponement or cancellation of high-value sports events, faces a further pullback in advertising as both the scatter market weakens and advertisers seek to either cancel or shift already committed ad spending.
The rate at which these subsectors recover will also depend on the health of the advertisers. Advertisers in the travel sector, hotels, cruise lines, film, theme parks, and other sectors dependent on consumer interactions, will recover more slowly as social distancing policies may stay in place longer and consumers' reluctance to take part in group events or activities may take time to overcome.
Table 2
S&P Global Ratings Revised 2020 U.S. Advertising Revenue Forecast
Media Sector Previous (Jan. 2020) (%) Change (%) Revised (March 2020) (%)
Digital 11.5 (13.5) (2.0)
Local television (incl. political) 9.3 (11.3) (2.0)
Network television 6.4 (12.4) (6.0)
Cable television 1.5 (9.5) (8.0)
Local political advertising ($ mil.) 3,050.0 0.0 3,050.0
Total television 5.0 (11.0) (6.0)
Radio (1.5) (15.0) (16.5)
Outdoor 3.3 (16.3) (13.0)
Magazines (10.0) (15.0) (25.0)
Newspapers (15.0) (15.0) (30.0)
Direct mail (2.0) (18.0) (20.0)
Advertising, excluding Digital 0.4 (13.9) (13.5)
Total advertising 5.3 (14.0) (8.7)
U.S. GDP growth 1.9 (3.2) (1.3)
U.S. consumer spending 2.4 (3.8) (1.4)
Note: Both cable and network TV estimates had included the 2020 Summer Olympics, which has now been moved to 2021. Source: S&P Global Ratings estimates.