16 JUN 2020

GLOBAL ADVERTISING TO CONTRACT 7.2% IN 2020

The pandemic will continue to negatively affect the advertising and media industries through the end of 2020, although the ad market is expected to recover in 2021, according to Magna.

16 JUN 2020

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The Covid-19 pandemic will continue to negatively affect the advertising and media industries through the end of this year, as consumption habits and marketing budgets change, although the ad market is expected to recover in 2021, according to predictions from Magna.

In detail, the global ad economy will contract 7.2% this year, which is the worst reduction in worldwide ad spending in recent memory. That estimate includes the stimulus from cyclical events that add incremental spending to the global ad economy, such as the U.S. elections, but excluding the impact of such events, Magna estimates the global ad economy will contract 7.8% this year, but will rebound 6.4% in 2021.

This investigation from IPG Mediabrands Magna unit also estimates that the ad economy in the United States will shrink 4.4% and will rebound 4.0% next year.

Over its past three forecasts, Magna has revised the U.S. ad growth downward by 10% points from a growth of 6.6% in its December 2019 forecast, to minus 2.8% in March, just as the Covid-19 pandemic was beginning to impact the economy - and now down to 4.4% this month.

“Beyond the short-term V-shaped recession/recovery impact on the economy and the advertising market, the Covid-19 crisis will have global and long-term effects on society, business models, consumption habits, mobility and media usage,"  said Vincent LeTang, Executive Vice President of Global Market Intelligence at Magna, and the author of the forecast report.

He added that all of these factors indicate a "more subdued economic" expansion, as well as ad spending, through 2024. To put this in perspective, LeTang estimates that total global ad volume in 2021 has been reduced by nearly $100 billion, from $745 billion in Magna's original long-term planning to just $647 billion currently.

The Covid-19 crisis will have global and long-term effects on society, business models, consumption habits, mobility and media usage” Vincent LeTang Executive Vice President of Global Market Intelligence at Magna