U.S. ad revenue growth will slow down more than previously expected in 2019, according to a new study out of Magna, a division of Interpublic Group.
The agency now predicts domestic ad revenue will increase 4.1 percent to $217 billion. It had previously forecast 4.4 percent growth. The revision is due to the cooling down of the economic environment, says Vincent Letang, exec VP of global market intelligence at Magna.
One area poised for meaningful growth in 2019 is over-the-top video, which has seen dramatic consumer adoption and has benefited from viewing from the likes of YouTube and Hulu on connected-TV screens. Magna expects the space to hit $3.8 billion this year and reach $5 billion by 2020. Of course, this still pales in comparison to the $70 billion traditional TV ad business.
While 2019 might see a bit of a slowdown, 2018 turned out to be a more robust year than previously estimated, thanks to a stronger fourth quarter. Magna said domestic ad revenue spiked 9.6 percent to $212 billion, up from Magna’s preliminary estimate of $207.5 billion.
This was the strongest growth rate in a century, Letang says.
Out-of-home and search advertising posted the biggest growth in 2018, with paid search increasing 23 percent to $54 billion, and out-of-home up 4.5 percent to $8 billion.
Out-of-home, which includes things like billboards and TVs at gas stations, is outperforming every other linear channel due in a large part to the massive increase in spending from the technology sector. It’s the only space in non-digital media that has seen consistent growth, averaging 4 percent growth in the last nine years, compared to a 1 percent decline for all non-digital media sales like TV, print and radio.