MUMBAI: There appears to be doom and gloom for the media sector, considering the sharp downturn in consumer sentiment and in advertising courtesy Covid2019. Global agency Zenith concurs with this view and has revised its numbers for 2020.
In its latest Advertising Expenditure Forecasts report, it says that the decline in global ad spend will be 9.1 per cent in 2020, much lower than the 9.5 per cent drop experienced during the recession of 2009. And it is also optimistic about 2021 when it says ad dollars will rise by 5.8 per cent buoyed by the Olympics in Tokyo and the UEFA Cup in Europe.
It explains that advertisers pulled the plug when the scale of the pandemic started becoming clear and the worst period was between March and May 2020, with the timing varying by country, the agency said. But with the unlocking happening in many territories ad spends will start climbing back again.
Zenith pointed out that various regions are expected to decline with differing intensities. US adex is expected to dip just seven per cent, benefiting from political spending around the presidential elections in November. Asia Pacific is forecast to shrink by eight per cent, thanks to the success of some markets in keeping the virus under control. Advertisers in western Europe cut spend aggressively in Q2 and there the shrinkage will be a sharper 15 per cent. Central and eastern Europe will decline eight per cent, Latam 13 per cent and MENA by 20 per cent.
Legacy media such as print, television and radio are all expected to be impacted, though the latter two will have it easier. TV and radio are expected to be hit by 11 per cent and 12 per cent drops, while newspaper and magazine advertising are expected to get 21 per cent and 20 per cent shaves in what advertisers spend on them. Zenith says that the crisis has only exacerbated the long term decline that print advertising has been witnessing for some time now. Out-of-home and cinema have suffered the most from government restrictions on movement, and consumers’ avoidance of public places. Out-of-home advertising is forecast to shrink by 25 per cent in 2020 and cinema by 51 per cent.
Digital advertising will end 2020 with just a thin slice of two per cent cut out of its growth. Consumption of digital media, along with television, spiked in the early weeks of lockdown. Although both are now trending down again, they are not expected to retreat to pre-crisis levels any time soon. Together with the rise of e-commerce and data, this has driven a rapid shift in media budgets from traditional to digital media, accelerating the trend that was already taking place. Zenith now forecasts that digital advertising will account for 51 per cent of global ad spend this year, up from the 49.5 per cent it forecast in December.
Digital ad budgets were cut quickly in the crisis’ first phase, says Zenith, given that it is generally easier to cut without penalty. But as time progressed, brands allocated more budget into digital channels to take advantage of their flexibility and ability to optimise performance, particularly important qualities in an uncertain time. Zenith does not expect any of digital’s share to return to traditional media as the crisis eases – its market share is forecast to reach 54.6 per cent in 2022.
The agency disclosed that the pandemic has imposed some behavioural changes in consumers, they are relying increasingly on e-shopping and e-commerce. It cited global research by Criteo which said that in recent months 53 per cent of consumers have discovered at least one form of online shopping that they plan to continue. Retail footfall will be subdued for months, if not years, to come, says Zenith. This has forced brands to accelerate digital transformation efforts and made it critical to have a robust commerce strategy in place, either D2C or through retail partners.
The crisis also raised the value of first-party data for brands. First-party data gives brands powerful insights into their customers’ behaviour and provides a real competitive edge. It will allow brands to navigate changes to consumers’ behaviours and attitudes as the crisis develops, and identify when it’s time to start investing for the upturn.
Zenith is not optimistic about the prospects for advertising in newspapers and magazines in 2021, both will continue to slide. As compared to this TV and radio will grow two per cent and one per cent respectively. While OOH and cinema will spurt 16 per cent and 65 per cent respectively in 2021, they will not revert to the 2019 peak even by 2022.
“The Covid2019 forced brands to embrace digital advertising even faster than expected and made digital transformation of businesses more urgent than ever,” said Zenith’s head of forecasting Jonathan Barnard. “This year will be the first in which digital advertising will attract more than half of total global ad spend, a milestone we previously expected in 2021.”
