Advertising spend in the US grew +7.6% year-on-year to $107bn in the first half of 2019 and, excluding cyclical events like election spending, is on course to grow +6.3% for the full year, according to the latest adspend report from Magna Global.

The strong performance in the first half came despite concerns about a possible economic downturn and prompted Magna, a unit of IPG Mediabrands, to upgrade its full-year estimate from the +5.1% growth rate it had forecast in June.

“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 growing by +4%, as consumers shrugged off the threat of a trade war and continued to spend their growing income,” the report said.

Magna noted that this strong economic environment contributed to increased spend from several key verticals – including finance, retail and travel – and that marketing innovation and a “dynamic technology vertical” also contributed to the growth.

For example, several direct-to-consumer (DTC) start-up brands, which until recently spent nearly all their small marketing budgets on digital media, have started to branch out into TV advertising.

Their collective all-media spend increased by +30% in the first half, but their national TV spend jumped by +50%, meaning that the 35 top-spending DTC brands now account for half the combined spend of the so-called FAANGs (Facebook, Amazon, Apple, Netflix and Google).

According to the Magna data, direct digital media ad spending increased by +19% in the first half, although a maturing digital market meant the format’s growth rate was slower compared to previous years.

Total editorial media adspend – defined as TV, digital video, publishing, audio and OOH – remained stable in the first half (+0.2% to $61bn) and Magna said that was editorial media’s best performance in years.

The “resilient performance” from editorial media channels was driven by strong demand for digital video (+25%), OOH (+7%) and audio media (+2%), while national TV remained neutral (0%).

Looking ahead to 2020, Magna said it expected an 11th consecutive year of growth (+6.2%) once cyclical events are factored in, such as the Summer Olympics in Tokyo and next year’s election spending.

Commenting on the year ahead, Vincent Letang, EVP of global market intelligence at Magna, said: “We forecast an 11th year of growth in 2020 as record political spending will generate an all-time high of $5.5bn in incremental ad revenue and mitigate the effect of the expected economic slowdown.”

Sourced from Magna Global; additional content by WARC staff