Global ad spend rebound likely in 2021, says report
By M4G Bureau - December 09, 2020
MAGNA’s global advertising market place report spells positive forecast for the advertising and marketing industry, driven by expected economic recovery and COVID vaccination
In a recently released report, MAGNA has revealed that the global advertising market place shrank by -4.2% to $569 billion amidst the COVID-induced recession, but some markets (US, China) proved more resilient than initially feared, thanks to the scale and resilience of digital media formats (+8%). Total global advertising revenues (linear + digital) shrank by $25 billion (-4.2%), down to $569 billion – a milder decline than expected in June (-7.2%).
According to latest reports, media owners’ linear advertising revenues (linear TV, linear radio, print, OOH) decreased by an estimated -18% in 2020, down to $233 billion globally, due to the global economic recession, in line with MAGNA’s spring forecasts (-16%). Brand advertising budgets and therefore linear ad formats (linear TV, linear radio, print, out-of-home and cinema) suffered the most from the economic recession and the restrictions to consumer mobility.
Print, radio and OOH ad sales declined more heavily: -24% to -25%. Out-of-home, the most dynamic linear media channel pre-COVID was hurt by the decline in consumer mobility, traffic and audience, in addition to the fall in demand from local and national advertisers. Finally, theatre closures caused cinema advertising to decline by -66% this year.
Travel, automotive and restaurants made the heaviest advertising budget cuts while CPG/FMCG, finance and technology remained stable overall, highlights the report.
In 2021, COVID vaccination, economic recovery and delayed cyclical events will fuel a global rebound for marketing and advertising activity: +7.6% to $612 billion (linear: +3.5%, digital +10.4%, US +4.1%).
However, despite economic recovery, global linear advertising spend will remain $42 billion smaller (15% smaller) than the pre-COVID level of 2019, the report adds.
In 2021, MAGNA expects eight of the ten key industry verticals to improve and increase spends, compared to 2020. As the COVID restrictions are gradually relaxed during the year, the entertainment (e.g. movie releases) and restaurant businesses will benefit from a gradual reopening, and food & drinks brands will benefit from a return to normal sports schedules and social interactions. The automotive and travel industries, however, will remain financially fragile. High unemployment rate leads to fewer people making large purchase decisions, such as buying a car; and the lingering effects of the COVID-19 pandemic leads to fewer people traveling. Even if travel and auto consumption recover (and they might be considering the low comps), MAGNA anticipates these sectors to remain cautious with marketing costs and start with direct media rather than linear media.