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The advertising industry is not expected to recover before 2021

News - Jun 30, 2020

COVID-19’s negative influence on the global advertising and media industry will stick by the end of the year, due to the change of media consumption habits and marketing budgets. The recovery is expected next year.

The economic fall due to coronavirus is presented in the latest reports of Magna Global, IPG Mediabrands’ strategy arm.

In the short run, the US media owners’ revenue (with linear and digital features) will fall to $213 billion, compared to $224 billion in 2019.

More specifically, the American advertising market will decrease by 4% because of political ads (this year’s presidential campaign is estimated at $5 billion) and digital media, which help mitigate the decline in linear marketing sales (with the estimated drop of 17%, with political advertising excluded).

TV consumption slightly increased during the stay-at-home orders from mid-March until end-April.

On the other hand, digital ads benefited from the increase in screen time, and ad spends in this sector (including search, video and social) will stabilise this summer and recover in the second half.

Finally, digital advertising is now projected to grow 2% year-over-year, but digital video is expected to grow 10%.

That is good news, especially for publishers, who could benefit from the changing trends in advertising. Earlier this year, most publishers reported downward trends in digital advertising, in part due to brand safety concerns over messaging appearing next to COVID-19 coverage.

Before this recovery, however, Magna is expecting precipitous declines in the second quarter worldwide, especially among TV (30%), radio (34%) and print media (40%).

Overall, the ad market is projected to stabilise in the third quarter and recover in the fourth quarter. In that case, that’s a success for media organisations that were forced to cut wages and other income in order to avoid layoffs.

Magna had previously predicted the global ad market would grow to $745 billion by 2021. It’s now forecasting that it will only reach $647 billion by then.

Source: Media marketing

 

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