GroupM has released its Global Mid-Year Media Forecast that says the Indian advertising economy will decline by more than 20% this year. The report details how Covid-19 sharply transformed the global advertising economy from a 6.2% growth rate in 2019 to 11.8% decline this year.
While severe to be sure, 2020’s decline can still be considered ‘modest’ given the scale of the impact of the pandemic on global GDP, which will fall by much more than it did in the 2009 global financial crisis. During that year, when GDP declined by 1%, global advertising is estimated to have fallen by 11.2% in nominal terms.
Among the top 10 markets, India ranks seventh in terms of contribution to the 2021 global advertising growth by adding $1795.6 million.
Several mid-sized or larger markets are expected to decline by more than 20% this year. In addition to Brazil, one can expect such an outcome from the MENA region and Spain also.
Including US political advertising, it is estimated that global advertising will decline by 9.9% in 2020. The median market should decline by more, or 12.2%, which in part reflects that declines are less pronounced in the world’s top two advertising markets: the US (expected to fall 7.5% including political advertising) and China (expected to fall 2.8%). These two combine to account for more than half of the world’s total advertising activity.
Overall, one expects global advertising to grow by 8.2% next year on an ex-US political basis, or by 5.9% including it. The median market is expected to grow by 10%.
Here are four areas considered in detail at the midway point of 2020:
- Digital Extensions: GroupM has introduced 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.
- According to the estimate, in 2020, digital extensions of TV, radio, print and outdoor advertising should equate to $31 billion, or 13% of total advertising activity (up from $22 billion, or 7%, five years ago). Digital extensions are most pronounced in the outdoor sector, where they account for $9 billion this year, or 31% of the total outdoor sector’s activities. Digital extensions of traditional television equate to $12 billion this year, 9% of that medium’s total.
- Digital Advertising: Expected to decline by 2.3% during 2020. This follows nearly a decade of double-digit growth, with many years exceeding 20% at a global level.
- During 2020, digital advertising will have a 52% share of media captured, up from 48% in 2019 and 44% in 2018. Share growth should abate somewhat going forward, adding 1-2% each year. The new estimates also break out search from non-search digital advertising, with search accounting for $109 billion in revenue during 2020, falling 2.6%. Other forms of digital advertising that account for $172 billion (excluding digital extensions of traditional media) will fall by less, or 0.6% this year.
- Television Advertising: Expected to decline by 17.6% in 2020, ex-U.S. political advertising, before rebounding slightly to grow 5.9% 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 the growth of +3.7% this year and +11.3% next year – around 9% of total TV spending this year.
- Television’s share of advertising, if we define TV including its digital extensions, is expected to be 27% during 2020, down from approximately 37% 10 years ago.
- OOH Advertising: expected to decline by 25.0%, including digital out-of-home media but next year one should see a partial rebound with 14.9% 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.