GroupM has revealed the finding of is twice yearly global ad spend forecast This Year, Next Year.
The report outlines advertising growth forecasts, impacts from the global pandemic, ad spend projections by media channel and segments on Digital advertising, TV advertising OOH, and digital extensions.
The key highights include:
- It outlines a 19 per cent forecast decline in adspend in 2020
- A forecast of 25 per cent growth expected in 2021
- Australia is identified as a Top 10 contributor of growth
Here’s the industry overall forecast:
- Excluding U.S. political advertising, there will be a 11.9 per cent decline during 2020, followed by 8.2 per cent growth next year on a comparable basis.
- This decline can still be considered “modest” given the scale of the impact of the pandemic on global GDP, which will fall much more significantly than it did in the 2009 global financial crisis.
- In that year, when GDP declined by one per cent, it’s estimated that global advertising fell by 11.2 per cent.
- However, we do see positive news on the horizon as we expect global advertising to grow in 2021 by double digits for half of the top 10 markets (including Australia) and by single digits for the other half.
Here are four areas considered in detail at the midway point of 2020:
- Digital Extensions: We are introducing estimates of “digital extensions,” digital advertising associated with traditional media. These figures are broken out to show the degree to which traditional and digital advertising overlap within individual media types.
- Group M estimates, in 2020, digital extensions of TV, radio, print and outdoor advertising should equate to $US31 billion, or 13 per cent of total advertising activity (up from $US22 billion, or seven per cent, five years ago). Digital extensions are most pronounced in the outdoor sector, where they account for $US9 billion this year, or 31 per cent of the total outdoor sector’s activities. Digital extensions of traditional television equate to $US12 billion this year, nine per cent of that medium’s total.
- Digital Advertising: expected to decline by 2.3 per cent during 2020. This follows nearly a decade of double-digit growth, with many years exceeding 20 per cent at a global level.
- During 2020, digital advertising will have a 52 per cent share of media captured, up from 48 per cent in 2019 and 44 per cent in 2018. Share growth should abate somewhat going forward, adding one to two per cent each year. Our new estimates also break out search from non-search digital advertising, with search accounting for $109 billion in revenue during 2020, falling 2.6 per cent. Other forms of digital advertising that account for $US172 billion (excluding digital extensions of traditional media) will fall by less, or 0.6 per cent this year.
- Television Advertising: expected to decline by 17.6 per cent in 2020, ex-U.S. political advertising, before rebounding slightly to grow 5.9 per cent next year.
- Digital extensions and related media, including advertising associated with traditional media owners’ streaming activities, as well as Hulu, Roku, etc., will fare much better, with growth of up 3.7 per cent this year and up 11.3 per cent next year – around nine per cent of total TV spending this year.
- Television’s share of advertising, if we define TV including its digital extensions, is expected to be 27 per cent during 2020, down from approximately 37 per cent 10 years ago.
- OOH Advertising: expected to decline by 25 per cent, including digital out-of-home media but, next year, we should see a partial rebound with 14.9 per cent growth.
- Beyond 2021, we expect outdoor advertising to grow by low or mid-single digits and generally lose share of total advertising, although we do expect larger brands to generally increase their allocations of budgets to the medium.
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