The nature of the downturn and new consumer behaviours has forced businesses to rapidly adapt to e-commerce models, and digital advertising benefitted
The advertising industry will end up declining only by 5.8% on an underlying basis (excluding-U.S. political advertising), GroupM highlighted
Even as the global economy saw a massive setback on the back of the pandemic induced lockdown, the advertising industry will end up declining at only by 5.8% on an underlying basis (excluding-U.S. political advertising), GroupM’s ‘This Year, Next Year: Global 2020 End-of-Year Forecast Report,’ revealed. This, as per GroupM, is a much better expectation than its June forecast of an 11.9% decline for 2020, but still a sharp fall from 2019’s 8.7% growth rate.
As per the report, the nature of the downturn and new consumer behaviours has forced businesses to rapidly adapt to e-commerce models, and digital advertising benefitted. This is the new baseline from which e-commerce is expected to keep growing and, along with it, performance-based marketing. As such, GroupM has updated its 2021 outlook for the global advertising market from its June forecast of 8.2% to 12.3% growth.
As far as the eight largest markets are concerned—the U.S., China, Japan, the U.K., Germany, France, South Korea and Canada— seven of them are expected to see declining growth of nearly 2% and worse in 2020. The exception is China where a growth rate of 6.2% is expected. However, all these countries are expected to show growth in 2021: 11.8% in the U.S., 15.6% in China, 12% in Japan, 12.4% in the U.K., 4.6% in Germany, 7.2% in France, 1.6% in South Korea and 15.1% in Canada.
The report said that digital advertising is expected to grow by 8.2% during 2020, excluding U.S. political activity. This follows nearly a decade of double-digit growth, including the last six years, when it was better than 20% globally. Digital advertising for pure-play media owners like Amazon, Facebook, Google, etc., should be 61% of advertising in 2021. This share has doubled since 2015 when it was only 30.6%. By 2024, digital advertising may have a 66% share globally.
Television advertising, on the other hand, will decline by 15.1% excluding U.S. political advertising, before rebounding to grow 7.8% next year. Digital extensions and related media, including advertising associated with traditional media owners’ streaming activities (primarily on connected environments), will grow 7.8% this year and 23.2% next year.
Meanwhile, outdoor advertising is estimated to decline by 31% during 2020, including digital out-of-home media. Next year should see a partial rebound, with 18% growth. Beyond 2021, outdoor advertising is expected to grow by low- or mid-single digits and generally lose share of total advertising; however, larger brands may allocate more of their budgets to the medium.
Print advertising, including newspapers and magazines, is expected to decline 5% for the year, a significant acceleration over the high-single-digit declines of recent years. However, those single-digital declines should resume following an economic recovery. While audio advertising is likely to decline by 24% during 2020 as advertisers disinvest, in part, because of the medium’s dependence on away-from-home activities, such as driving. Digital extensions, including streaming services from terrestrial stations and their digitally-oriented competitors and podcasts, still attract relatively small audiences of a few billion, but help make the broader medium more appealing to marketers.