Ad markets recovering 2021
After a dramatic year with advertising and marketing spending falling struck by the pandemic there seems to be a considerable optimism in forecast for 2021 with total ad spending expected to recover. Advertising agency Magna says the advertising market is expected to recover next year.
“If the mainstream macro-economic scenario holds, and the US GDP grows by 3.2%, we are looking at a total ad market that would recover by 4% next year,” says Vincent Letang, EVP and Managing Partner of Global Market Intelligence at Magna.
The growth will mostly be in digital ads, while linear ad markets like TV and radio will barely stabilize.
The gradual stabilization of the market to 4 factors:
1. The economic reopening
2. Political spend increases
3. The return of sports to TV
4. The Olympics
“We think sports programs drives more than 20% TV ad spend in the U.S.,” says Letang. Looking ahead to 2021, he says the Summer Olympics should generate roughly USD 800 million dollars of additional ad spend in 2021.
AUTOMOTIVE AND RETAIL WILL STRUGGLE
Nearly every industry is expected to start increasing spend on advertising, but two of the top client verticals, automotive and retail, will continue to struggle, Magna predicts.
“Automotive was an industry that was already stagnating pre-COVID. Even if the economy recovers, the high unemployment rate will be an inhibitor to large ticket items like cars.”
Automotive advertising slumps, combined with an off-year for political advertising, is going to severely impact local TV advertising, the forecast says.
VIDEO ENTERTAINMENT
Marketing agency Zenith forecast that increased viewing, content and competition mean adspend by video entertainment brands will fall just 0.2% in 2020. Video brands will spend 57% of their budgets on digital advertising in 2020. Recovery in 2021 and 2022 will be hindered by falling revenues from free and pay-TV. India and Spain will lead adspend growth through 2022.
Video entertainment adspend will far outperform the ad market as a whole, which will drop by 8.7% across these same markets, Zenit said.
”The remarkable resilience of video entertainment adspend in this year of a global pandemic and subsequent recession is the result of increased demand from consumers, increased supply of content, and intense competition among video brands for viewers.”
”Faced with spending much more time at home, consumers turned to video content to keep themselves informed and entertained. In France, for example, TV viewing time was 30% higher year-on-year in April, and was still 11% higher in August.
Meanwhile online video platforms have invested huge sums in creating content to attract new viewers, forcing traditional broadcasters to up their game.”
”Adspend by online video brands has far outpaced traditional television recently. In the UK, adspend by online video platforms increased by 79%, while adspend by traditional television grew 34%.
PAY-TV PLATFORMS PUSHED UP SPENDING
In both Uk and US, television broadcasters and pay-TV platforms pushed up spending temporarily in response to their new competition, but this will prove unsustainable in the face of ongoing decline in their revenues, both COVID-19-related and structural, Zenith said.
“Consumers are now faced with a vast and confusing array of programmes and films vying for their attention,” said Christian Lee, Global Managing Director, Zenith.
“Video brands need to cut through this complexity and give consumers entertainment that matches their personal preferences with minimum fuss. Brands that provide compelling experiences and act as more than just repositories of content will be best positioned for growth in the long term.”
”Video entertainment brands spend more on digital advertising, out-of-home and cinema than the average brand. Their reliance on out-of-home and cinema has posed a particular challenge this year, as they have been forced to compensate for lost audiences from empty cities and closed cinemas. This means even more digital spending, which is forecast to rise from 53% of total video entertainment spend in 2019 to 57% in 2020.”
While video entertainment is expected to substantially outperform the market in 2020, Zenith forecasts it to underperform over the next two years, with no growth in 2021 and 1.3% growth in 2022. Online video platforms will have less capacity to raise budgets after spending heavily in 2020, and traditional TV broadcasters will be weighed down by shrinking revenues from TV advertising and pay-TV subscriptions.
Nevertheless, Zenith expects video entertainment adspend to be 1.2% higher in 2022 than it was in 2019, while overall advertising will still be 0.6% below its 2019 peak.
TRADITIONAL MEDIA
IAB AB’s latest survey sees the “light at the end of the tunnel” for digital advertising, according to media buyers and sellers. Digital ad spend for 2020 is after all expected to end with a 6% increase versus 2019. But for traditional media the forecast is dour.
IAB says buyers expect digital ad spend to increase by 6% for 2020 compared to the previous year. Paid Search (+26%), Social (+25%) and CTV (+19%) are among those with most impressive gains. Digital Audio and Podcasts show slight decreases vs 2019. DOOH (digital-out-of-home) is expected to be hardest hit with a decrease of 8 % for all Traditional.
In the UK, ad buyer Group M predicts that the UK Government marketing campaigns will be “key” to newspaper ad revenues rebounding next year.
Group M is forecasting total UK advertising spend of GBP 23.6 billion in 2021, which would be the biggest growth (12.4%) seen in more than a decade. This follows a 2020 which saw the first decline in the sector of 4.4% to a market total of GBP 21 million, following growth of 8.6% in 2019 to GBP 22 million.
Print media was one of the worst-hit sectors 2020, with an expected decline of 23% – but a rebound of 13% in 2021 is anticipated.
”Newsbrands were “bearing the brunt” of this year’s decline with an expected drop in ad revenue of 28% in 2020 ahead of 17% growth next year”, Group M predicts.
”Government spending with new brands this year had “helped temper declines”, adding: “The degree to which it returns next year will be key to any rebound.”
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