MAGNA FORECASTS A 12% DECLINE IN TV AD SALES FOR 2020

Magna Global revised its forecast for this year, as well as the next, to predict the economic impact that will result from media companies being forced to cancel plans and events during the coronavirus outbreak. Revised Magna forecast shows advertising declines across the board, comparing to a combination of the Great Recession and 9/11. “The current situation is totally unprecedented,” Executive Vice President, Vincent Letang said. “Its effects on supply, demand, and media consumption are more complex and widespread than in any ‘normal’ economic recession in the past, and some of them will outlast the current crisis. Nevertheless, there will be an ‘after.’ At this stage, Magna anticipates ad market stabilization and rebound in the second half of 2020, and moderate growth in 2021.”

Media suppliers’ total linear ad sales, previously expected to hold steady throughout 2020, are now projected to decline by nearly 12% in 2020. Full-year ad sales, previously predicted to grow nearly 7%, are now expected to drop by 2.8% across all media. Overall, all-media full-year ad sales may decrease by -2.8% this year as the spending cut from most industry verticals will be alleviated by the incremental political spend ($4.9 billion, up +26% vs 2016), and a v-shaped rebound in the second half. In total, Magna predicts ad spending in the US to drop by 2.8% at $217 billion, after previously expecting it to grow by more than 6.6%. The decline results from the impact the outbreak has had on various industries, including travel, restaurants, movie studios, and retailers. 

Magna does, however, predict a small rebound in the eve of, and during 2021. The Tokyo Summer Olympics, postponed until 2021, is expected to bring relief to the crisis. Ad spending industry-wide is expected to increase by 4% (up from its prior forecast of 3.7%, with the actual ad dollar growth to be up 2.5% from the previously forecasted 1.4%. Digital media ad sales will grow by 4% this year and re-accelerate to +7% next year, while search will slow down to 4.5%. Political ad spending is still trending 26% higher than that of the 2016 elections and will stabilize local TV sector, which is expected to see a significant downturn in all other forms of ad sales. Magna still predicts full-year revenue for local TV to increase by 1%. It could take several months before advertisers can set their long-term buying plans. Some media companies are open to the idea of pushing back the upfront marketplace and buyers are in favor of revamping the upfront, but don't want to do away with it entirely.