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US OOH sales gain +7% in 2019 H1: Magna Fall 2019 report

By M4G Bureau - September 23, 2019

Magna now expects that total OOH advertising sales will increase by +5.2% for full year 2019 and +3.2% in 2020

 Magna Advertising Magna AdvertisingAccording to Magna Advertising Forecast for fall 2019 report, US advertising market grows by +8% in first half as tech spend continues to fuel editorial media. The strong economic environment drove the increased spend from several key verticals (finance, retail, travel) while tech giants and “Direct-to-Consumer” (DTC) brands continued to expand their marketing budget to include editorial. Following the strong first half, MAGNA increased its full year 2019 forecast to +6.3% (excluding cyclical) from +5.1% previously.

The total Editorial Media Advertising Sales (TV, digital video, publishing, audio, OOH) were stable in the first half (+0.2% to $61 billion). It was their best performance in years, following a decline in 2018 (-1.5%) and 2017 (-2.4%). 2Q (+0.6%) was the first growth quarters in three That resilient performance from editorial media channels was driven by strong demand addressed to digital video (+25%), OOH (+7%) and audio media (+2%), and the stability of national TV (0%), offsetting the continued struggles of local TV (-5% excluding cyclical effect) and publishing (-12%).

Strong Ad Market in First Based on its analysis of US media owner’s financial reports, MAGNA finds that net advertising revenues (NAR) grew strongly in the first half of 2019 where +7.6% vs 1H18, across all media, accelerating further on an already strong market in 2018.

The main driver behind the first half advertising demand was a stronger-than-expected economic environment, with GDP growing by +2.6% and personal consumption (NPCE: the best precursor to advertising spending according to MAGNA’s historical statistical models) growing by +4%, as consumers shrugged off the threat of a trade war and continued to spend their growing This strong economic environment contributed to increased spend from several key verticals, including finance, retail, and travel.

Marketing innovation remains the other key driver to ad spend growth, with “Direct-to- Consumer” (DTC) brands (Wayfair, Peloton, Homelight, just to mention the three largest spenders year to date) growing their collective all-media spend by +30%, and their national TV spend by +50% in the first For years DTC brands were online-only start-ups in retail or services, spending 100% of their small marketing budgets on digital media, but many of them have reached the scale where national mass media (TV, radio, OOH) becomes a relevant part of the mix.

Out of home advertising sales gained nearly +7% in the first half of 2019 to $4.6bn. Growth peaked in the second quarter at +7.7%, the fastest growth in a Excluding the -4% decline in cinema ad revenues the growth of other OOH segments was in fact closer to +8% in the first half, with solid increases for the billboard and transit segments. Again, OOH benefits from the technology/entertainment verticals, driven by innovation and competition, increasing its ad budgets in editorial media. Amazon (+130% in 2Q), Disney (+25%), Apple (+22%) showed the largest growth rates year to date, while DTC brands (Bonobos, Casper, Keeps, Brooklinen, Bark Box, etc.) are increasingly using the medium too. Revenue derived from digital OOH units grew by +25% in the first half, driven by the constant growth in connected screens inventory, as exemplified by Outfront installing approx. 1,300 digital displays in New York’s subway system the first half of the year. MAGNA now expects that total OOH advertising sales will increase by +5.2% for full year 2019 and +3.2% in 2020.

According to Vincent Létang, EVP Global Market Intelligence and author of the report: “The US ad market had a great first half thanks to a strong economic environment as well as media innovation and a dynamic technology vertical. Digital media ad sales matured, as expected, but continued to grow close to +20% yoy, while editorial media performed better than expected thanks a recovery of radio, and OOH in full swing. We forecast an 11th year of growth in 2020 as record political spending will generate an all-time high of $5.5 billion in incremental ad revenue and mitigate the effect of the expected economic slowdown”.

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