U.S. ad market to stabilize due to growth in political ads -report

Sept 16 (Reuters) - The U.S. advertising market will begin to stabilize in the second half of this year as political ad spending piles up in an election year, and brands continue to pour money into digital advertising, according to a forecast on Wednesday from media research firm MAGNA Global, a unit of Interpublic Group of Companies.

Advertising spending, which often follows the health of the economy, plummeted beginning in March when the coronavirus pandemic hit the United States, and many businesses were forced to shut their stores.

Ad spending in the second half of this year is expected to decline 2% compared to the same period in 2019, after declining 7.2% in the first half of 2020.

That will mean a decline of 4.6% for the full year 2020 to $213 billion, which MAGNA said is in line with its previous forecasts.

Political ad spending is expected to reach a new all-time high this year at $5.1 billion, as fundraising and ad spending during the first half of the year was stronger than expected, MAGNA said.

"It's surprising because we thought it would slow down due to COVID. But before March, so much money had been raised already," said Vincent Letang, executive vice president of global market intelligence at MAGNA.

About two-thirds of political ad dollars will be spent on local TV, but digital ad platforms will be the second-biggest winner, earning $1 billion.

Digital ad platforms, which include Alphabet's Google and Facebook, were "remarkably resilient" during the second quarter, when pandemic lockdowns were at their peak, Letang said, and the sector managed to grow 5.7% in the first half of this year.

That was partly due to a massive increase in consumption of digital media as people stayed home, and small businesses that jumped into digital marketing to keep their businesses alive, he added.

The total U.S. ad market is expected to rebound next year and post 4% growth, according to MAGNA.

(Reporting by Sheila Dang Editing by Chizu Nomiyama)

09/16/2020 13:00

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