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The economic recovery from the coronavirus pandemic will lead to a record 14 percent gain in global advertising spending this year to a record $657 billion, according to the latest forecast from media investment and intelligence company Magna.
That would be above the 12.5 percent gain recorded in 2000, and a significant increase from Magna’s previous forecast for an 8 percent increase.
“In the U.S., media companies’ net advertising revenues will reach a new all-time high of $259 billion in 2021,” growing 15 percent, the strongest growth rate in 40 years, the firm said in a summary of its projections.
The predicted global ad gain of $78 billion in 2021 follows a decline of 2.5 percent in 2020. “The marketplace will continue to grow in 2022,” Magna said, estimating a 7 percent gain. “Advertising activity is fueled by economic recovery (global GDP +6.4 percent) benefitting key ad-spending verticals severely hit by COVID-19 last year (automotive, travel, entertainment, restaurants), stronger-than-ever organic drivers to digital marketing and international sports events (Tokyo Olympics, UEFA Euro).”
Digital ad formats will capture most of the growth with ad sales here expected to rise 20 percent to $419 billion, 64 percent of total ad sales, according to Magna’s report. “Linear ad sales are slower to recover but will stabilize full-year (+3 percent to $238 billion).”
All 70 ad markets it monitors will grow this year, with expected increases in China (16 percent) and the UK (17 percent) being among the largest, Magna said.
The U.S. ad gain of $34 billion this year will come as digital ad sales will grow 20 percent and non-political linear ad sales will rise 4 percent, Magna said. In 2022, it expects further U.S. growth of 8 percent to $280 billion,” thanks to continued economic growth (GDP growth between 3.5 and 4.3 percent) and more cyclical drivers (Winter Olympics in the first quarter, mid-term elections in the fourth quarter 2022).”
“As economic recovery is stronger and faster than anticipated in several of the world’s largest ad markets – U.S., U.K. and China, in particular – and consumption accelerates, brands need to reconnect with consumers,” explained Vincent Létang, executive vp, global market research at Magna. “At the same time, the acceleration in e-commerce and digital marketing adoption that started during COVID, continues full speed into 2021, fueling digital advertising spending from consumer brands as well as small and direct-to-consumer businesses. This unique combination of cyclical, organic and structural drivers will lead to the strongest advertising annual growth ever monitored by Magna.”
The firm also addressed recent media mega-mergers. “Linear ad sales still represent the bulk of ad revenues for traditional media owners and their continued stagnation will trigger a wave of consolidation in the media industry, aimed at competing with digital media players,” it said. “Traditional media companies have no choice but to grow in scale in order to compete with digital media giants and invest in cross-platform advertising solutions. Traditional media owners are moving now as they believe antitrust authorities are ready to consider market shares in the broader media market and thus approve horizontal consolidations that would have been unthinkable just five years ago.:
Added Magna: “The U.S. TV market remains relatively fragmented following the merger of Warner and Discovery: The top three TV ad vendors (currently NBC, ViacomCBS and Warner/Discovery) will control just 60 percent of the U.S. TV advertising market, compared to 90 percent-plus for the top three broadcasters in most other advanced markets. Moreover, they will control only 15 percent of the broader, cross-platform ad market compared to 30 percent for Google or 16 percent for Facebook. Media consolidation is global, and international markets remain a step ahead as the top two French broadcasters (combined market share 90 percent) just announced their own merger plans.”
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