Global Ad Market Recovering Faster Than Expected From COVID-19, Says Analysts

Tokyo Olympics Rings Behind Bars
BEHROUZ MEHRI_AFP via Getty Images

Global ad spend is expected to grow in 2021 as the Tokyo Olympics moves dates.

But expect a long and uneven recovery as economic uncertainty amid the pandemic continues into 2021 and beyond.

Global advertising expenditure is set to fall in 2020 as the media industry confronts the coronavirus pandemic, but the overall drop will be smaller than expected, analysts predict.

Zenith's Advertising Expenditure Forecasts report, released on Sunday, estimates the global ad spend will shrink by 7.5 percent in 2020 to $587 billion, down from an earlier 9.1 percent drop predicted in July 2020.

And Magna's latest advertising forecasts projects total global advertising revenues for linear and digital for 2020 will fall by $25 million, or 4.2 percent, to down to $569 billion, a smaller decline than a 7.2 percent fall predicted in June 2020.

The U.S. advertising spend collapse in 2020 was softened by strong political spending in the run-up to the U.S. presidential election. Magna estimates linear advertising sales will have fallen 15.8 percent to $81 billion at the end of 2020, and by 19 percent when excluding political ad expenditures.

By contrast, the U.S. digital media ad spend quickly rebounded from its second quarter trough decline, Magna analysts add, with digital media ad expenditures set to grow by 14 percent in the last three months of 2020 as social, video and political spending, in addition to the online holiday season ad revenues factored into the mix.

Magna forecast overall digital media ad spending will rise 10 percent in 2020, and then by 8 percent next year. And total linear media ad expenditures in the U.S. market will have fallen by 15.8 percent this year, before cutting that drop to 2.8 percent in 2021.

Against that recovery backdrop, a pivot to digital advertising accelerated by the COVID-19 crisis should have the ad industry preparing for a continued and yet uneven rebound in 2021.
"These forecasts assume that the global economy will start a sustained recovery as COVID-19 vaccines are introduced in 2021, and are subject to the wide uncertainty over how rapid this recovery wil be," Zenith analysts write in their latest global ad spend report.

Zenith forecasts the global ad spend will rise 5.6 percent to $620 billion in 2021, and Magna predicts a global ad spend rebound up 7.6 percent to $612 billion next year. For the U.S. market, Magna forecasts ad spending to grow 4 percent to $230 million in 2021, exceeding the 2019 record, while Zenith projects just 3.3 percent in growth.

Within those forecasts is a digital landscape driven by an expanding streaming space and changing viewer habits that predate the COVID-19 crisis and underpin the more rapid recovery forecast for this year and 2021.

"Magna believes the return of consumer mobility, major events and economic recovery will prompt most industry verticals to grow their linear advertising budgets in 2021, but the long-term trajectory has shifted even further towards a digital-centric markeing environment for years to come," Magna analysts said as part of their latest forecasts.