COVID-19 drives global ad spend down

Global ad spend will fall by almost 12 per cent this year (excluding US political advertising), but will be followed by growth of 8.2 per cent on a comparable basis next year, according to GroupM’s twice yearly This Year, Next Year report.

On a positive note, the media group expects global advertising to grow by double digits across half of the top 10 advertising markets, which include Australia, in 2021. The report covers ad growth forecasts, impacts from the global pandemic and ad spend projections by media channel including digital, TV, out-of-home and digital extensions.

Predictions for ad spend next year vary across countries, given a range of potential outcomes. For some countries, the economic consequences of 2020 will outlast the discovery of a vaccine, while in others, pent-up demand is expected to over-compensate for this year’s losses.

On the local front, ad spend is expected to fall 19 per cent in Australia this year, but head back up to 25.2 per cent in 2010. GroupM expects a 0.9 per cent decline in the US (including political advertising), 9.2 per cent growth for China, Japan 15 per cent, UK 12.6 per cent and Brazil 15 per cent.

At the mid-way point in 2020, GroupM has introduced estimates of ‘digital extensions’ associated with traditional media. It estimates in 2020, digital extensions of TV, radio, print and outdoor advertising should equate to US$31 billion, or 13 per cent of total advertising activity. 

Digital advertising is expected to decline by 2.3 per cent during 2020, which follows nearly a decade of double-digit growth. Search advertising will account for US$109 billion in revenue during 2020, falling 2.6 per cent, while other forms of digital advertising that account for US$172 billion (excluding digital extensions of traditional media) will fall by less, or 0.6 per cent this year. 

TV advertising is expected to decline by 17.6 per cent in 2020, ex-US political advertising, before rebounding slightly to grow 5.9 per cent next year. Digital extensions and related media, will fare much better, with growth of 3.7 per cent this year and 11.3 per cent next year. Television’s share of advertising, including its digital extensions, is expected to be 27 per cent during 2020, down from approximately 37 per cent 10 years ago.

OOH advertising is expected to decline by 25 per cent, including digital out-of-home media but should rebound with 14.9 per cent growth next year. Beyond 2021, GroupM forecast outdoor advertising to grow by low or mid-single digits and generally lose share of total advertising.

Finally, looking at opportunities for marketers in the challenging conditions, the report said brand-focused marketers can improve their share of voice gains in the current climate and this should lead to improving the share of sales in the future. And shifts in budgets across countries, from those facing highly negative economic trends to those less impacted, may offer additional opportunities.

The report reinforces the need to understand evolving consumer and customer needs, develop new offerings to meet those needs and invest against new ways to transact.

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