Global ad market to record single digit growth amid COVID-19, Magna
Slower sales and profits coupled with a lull in business activities occasioned by the coronavirus crisis are set to take a toll on global advertising as companies adopt a cautionary approach according to a recent report by centralized IPG Mediabrands resource Magna.
Depressed revenues from particularly travel, restaurant, retail and automotive sectors that will be greatly affected by the pandemic will see them reduce their marketing and advertising spend this year even as e-commerce and home entertainment segments gain according to the report dubbed Beyond the Outbreak: How COVID-19 will affect the global advertising market.
A global recession in the first half of the year as anticipated by economists will see global advertising slow down to single digit this year, down from more than 12 per cent growth projection by Magna and the over 20 per cent growth it has recorded every single year for the last eight years.
However advertising spending is bound to be bolstered to an extent by key events like the upcoming US elections that are poised to bring about five billion dollars in the ad market.
“Political ad spending will be more resilient than any other ad formats, but with the lack of campaigning, a slowdown in public donations to campaigns because of financial insecurity and the domination of the news cycle that Coronavirus currently possesses it is expected that spending will slow marginally but still provide an year-on-year boost to overall US spending,” the report noted in part.
And as more countries introduce lockdown and institute quarantine and social distancing practices, there is a growing behavioral and attitude change which has seen a birthed unique ways of doing business among them virtual working, remote education and new consumption trends from e-commerce to a surge in media viewing that have leaned heavily on digital media.
This, the report says, will have a lasting impact on ad spend with traditional media like radio suffering as automotive commuting stops for weeks and small business that form the bulk of radio spenders, cut down on ad spend during lockdown. Out of Home media sales are equally going to take a hit as highways and train stations remain largely deserted. However they are more likely to bounce back faster than other media owing to their sold performance over the years and a client mix.
“Today, digital media captures more than 50 per cent of total advertising spend and driven by organic growth and reallocation from other marketing channels. That means that the digital half of ad spend would slow down but probably not shrink even in the event of a recession. Linear media on the contrast would suffer the most,” the report further said.
Read the full report here