Ad spend is closely tied to economic activity (i.e., GDP). At this point it is a given that the North American economy is pointed towards a recession, if not a full blown depression, and one of the first things to be cut in an economic downturns is advertising budgets. Furthermore, with all professional sports (i.e. NFL, NBA, NHL, MLB, MSL, etc.) in the U.S. on indefinite hiatus and the postponement of the summer Olympics until 2021 due to the pandemic there is no live sports, which accounts for a significant portion of TV ad revenue.

We also know that consumers are viewing more digital video as social distancing and quarantining go into effect. How this affects long-term viewing patterns, and thus ad spend, remains to be seen, however, it is likely that there will be some lasting effect. We will learn much about advertisers’ confidence in general and their belief in TV as an advertising medium in the coming weeks as the U.S. upfront kicks off.

In Strategy Analytics most recent North American Advertising Forecast (i.e., baseline forecast) we projected total ad spend to grow 5% in 2020, reaching $267.8B. This is no longer the case given COVID-19. While significant uncertainty exists  as to how much damage COVID-19 will ultimately inflict on the North American economy we have run several scenarios based upon different economic conditions.