Agencies revise ad spend figures up as COVID dust settles

GroupM and Zenith both cite improved global ad spend figures for 2020 than first thought

The sharp declines seen across global advertising spend thanks to the COVID-19 pandemic are less significant than first thought, two fresh reports claim.

According to the latest GroupM Global Media Forecast, This Year Next Year, this year’s hefty advertising spend decline is now predicted to drop 5.8 per cent on an underlying basis for 2020, a marked improvement on the double-digit declines it predicted in June. While this is still significant compared to 2019’s 8.7 per cent growth rate, and we’re not out of the woods yet, GroupM global VP of business intelligence, Brian Wieser, said the industry has weathered the pandemic storm well and should return to double-digit growth next year.

As a result, GroupM has upped its 2021 global advertising market predictions to 12.3 per cent growth in 2021, up from the 8.2 per cent predicted in mid-2020. By contrast, one of the worst years on record, 2009, resulted in 10.9 per cent decline across the global ad market.

Read more: COVID-19 drives global ad spend down

This year’s forecast figures nevertheless make for tough reading. The best media category performer was digital advertising, expected to grow by 8.2 per cent in 2020. Yet it’s the first time figures have dipped under 10 per cent in a decade. Growth is being led by pure-play companies such as Google, Amazon and Facebook, which are expected to represent 61 per cent of advertising next year, double the market share they held in 2015.  

Television advertising is estimated to drop 15.1 per cent in 2020 then rebound to 7.8 per cent growth in 2021. Wieser said much of this growth will come from digital extensions, or digital advertising associated with traditional media. This growing category is estimated to be worth US$37 billion in 2020, up from $23 billion five years ago.

Another category significant affected in 2020 was out-of-home, which GroupM expects to record 31 per cent decline in 2020. This is then predicted to partially rebound to 18 per cent growth next year, before dropping to single-digit growth in the medium to longer term as OOH loses overall share. Audio advertising, meanwhile, is forecast to dip 24 per cent overall in 2020.

But it was cinema that fared worst, dropping by an estimated 75 per cent as a result of the global pandemic. Print is also expected to decline by 5 per cent this year, reflecting significant acceleration on the decline experienced in recent years, GroupM stated.

“It could have been worse,” the report authors stated in the overview to This Year, Next Year. “It’s hard to say much else that’s positive about 2020 for the advertising industry other than to note it has turned out to be less bad than we expected in the middle of the year.

“For the media business, 2020 will ultimately be remembered as more of a mild setback than an industry-changing economic catastrophe. At least in some ways”.

It’s a similar story across Zenith’s Advertising Expenditure Forecasts, which now predicts ad spend in 2020 will shrink 7.5 per cent to US$587 billion, compared to its -9.1 per cent July 2020 forecast. The agency is also now predicting 2021 global ad spend to increase by 5.6 per cent to US$620bn, boosted by the delayed Summer Olympics as well as UEFA Euro football tournament.

In Australia, Zenith estimated decline of 12 per cent in 2020 and said it didn’t expect 2021 will represent a bounce back to pre-COVID levels at a total market level. As a result, it’s forecasting 8 per cent growth locally in 2021. However, the agency was more optimistic about 2022, which it saw returning to 2019 levels led by investment in digital channels.

As for why things aren’t quite as bad as first thought, GroupM noted many businesses rapidly adapted to ecommerce business models, triggering associated advertising. In addition, many of the industries hardest hit were not significant for advertising, the report authors stated, while the downturn’s fixed end also helped alleviate the kind of uncertainty that the world saw during the 2008-2009 period. What’s more, the costs of the pandemic have been disproportionately borne by a narrow group of low-income earners, GroupM claimed.

However, the report warned marketers not oriented around digital or those without a national or global footprint were expected to emerge weaker from the pandemic, contributing to weakness is media such as print and radio, in markets globally. Overall, GroupM predicted the UK, US and Chinese markets will be healthier than the rest of the world in coming years.

Commenting on the trends and local market, GroupM Australia CEO, Mark Lollback, pointed to acceleration of trends like ecommerce, drawing closer ties between marketing activity and purchasing, as well as growth in BVOD audiences.

“Despite the challenges, within the disruption of this year there have been many opportunities to connect with consumers in different ways,” he commented. “Understanding the role media channels play overall in delivering objectives and enabling clients to maximise flexibility around consumer consumption trends in the short term, alongside long-term marketing goals are necessary as we move out of 2020.

“We have a sense of optimism going into 2021 and if we continue to lean into technology and the talented specialists in our agencies, and work closely with our media partners,  we can continue to deliver outcomes for or clients and help drive the Australian economy forward.”

Zenith also highlighted the pivot to ecommerce as a positive contributor and predicted this would lead to 1.4 per cent growth in digital ad spend this year.

“We’re expecting that the New Year will start showing growth across most media, as the market starts to claw back on this year’s losses,” Zenith Australia’s National Head of Investment, Elizabeth Baker said. “However, we don’t expect the 2020 drop to be fully mitigated before 2022 at best. Digital investment will lead the growth, with consumption accelerated throughout this pandemic.”  

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, follow our regular updates via CMO Australia's Linkedin company page, or join us on Facebook: https://www.facebook.com/CMOAustralia.  

 

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