Insights
Industry
People
Culture
Brand Studio
Facebook Hub
Choueiri Group Deep Dives
OMD Corner
LEAD with ABG
Insights
Brand Studio
Facebook Hub
Choueiri Group Deep Dives
OMD Corner
LEAD with ABG
ABOUT US
CONTACT US
ADVERTISE WITH US
Insights Industry
Back
The Global End of Year Forecast by GroupM
By Arjun RKSun, Dec 13 2020

Contact

The report looks at 2020's impact on various advertising mediums.

groupm-report

It's kind of relieving to read an industry report label 2020 as more of a mild setback for the media business rather than an industry-changing economic catastrophe.. Despite the grim realities of a global economy that will be the worst since the Great Depression, advertising weathered the storm relatively well and will end up at declining by “only” 5.8% on an underlying basis (excluding-U.S. political advertising).  Even though it's a sharp fall from 2019’s 8.7% growth rate, it didn't meet the earlier forecasted decline of 11.9%.

The nature of the downturn and new consumer behaviors forced businesses to rapidly adapt to e-commerce models, and digital advertising benefitted. This is the new baseline from which e-commerce is expected to keep growing and, along with it, performance-based marketing. Marketeers will likely move their spending away from media or platforms that don’t directly affect their long-term branding or their near-term performance goals. Additionally, marketeers not primarily oriented around digital, or those that don’t have national or global footprints, will likely emerge weaker after the pandemic. This would contribute to weakness in certain media, especially print and radio, in many markets around the world. 

Digital Advertising 

Digital advertising is expected to grow by 8.2% during 2020, excluding U.S. political activity. This follows nearly a decade of double-digit growth, including the last six years, when it was better than 20% globally. After 2021, it is difficult to imagine an annual growth rate above the high teens. The new figures estimate that pure-play digital media owners  like Amazon, Facebook, Google, etc. will collectively capture 61% of all advertising next year. 

The report believes that while robust growth at a high single-digit level should generally continue through at least 2024, those rates of growth are unlikely to be much more elevated or continue for long, because other media will still continueto attract a large, if declining, share of spending. Another key factor underpinning growth is e-commerce activity, alongside other forms of pandemic-accelerated digital transformation. There are almost certainly vast numbers of new small businesses that only recently started advertising but that now collectively spend significant sums online. It remains unclear how many small businesses not currently advertising will eventually do so.

Some businesses are also shifting away from long-term, brandfocused marketing in favor of shorter-term, more transactional efforts. This causes spending to almost naturally shift online; however, a shift toward transactional business objectives does not mean that marketers will abandon their brands. When all else is equal, stronger brands should lead to improved performance, and brand-building will still require a media mix that isn’t exclusively digital.

Television advertising 

Television advertising will decline by 15.1% excluding U.S. political advertising, before rebounding to grow 7.8% next year. This is generally because so many large brands continue to lean heavily on television. Specifically, they continue to prefer ad units that are adjacent to professionally produced video content and allow them to borrow from that content’s brand equity. Further, marketeers continue to have a strong creative affinity for TV commercials. To the extent that there is an ongoing emergence of new forms of what we are calling “television,” the medium will continue to sustain advertising revenues at its current levels. 

As ad-supported connected TV grows, it will take share from traditional TV, thus increasing its appeal to advertisers. On the other hand, that appeal will be partially constrained by the challenges of measuring related advertising and doing so in a manner that is consistent with traditional TV ratings. Assessing the reach and frequency of campaigns across multiple environments, applying frequency capping and ensuring brand safety represent additional challenges to be managed.

Digital extensions and related media, including advertising associated with traditional media owners’ streaming activities (primarily on connected environments), will grow 7.8% this year and 23.2% next year. These digital extensions will amount to around 9% of total TV spending this year. The ongoing decline in traditional TV viewing since the spring peak has been exacerbated by increasing availability of non-ad-supported streaming services and could fuel inflationary conditions. Television’s share of advertising, including digital extensions, is expected to be 24% during 2020, down from approximately 38% at this point 10 years ago.

Outdoor and Cinema advertising

Outdoor advertising is estimated to decline by 31% during 2020, including digital out-of-home media. Next year should see a partial rebound, with 18% growth.  This assumption is highly dependent on both the resumption of normal consumer activity in the second half of 2021 and a rebound of advertiser spending around the same time. Beyond 2021, the report expects outdoor advertising to grow by low-or mid-single digits and generally lose share of total advertising; however, there are expectations that larger brands generally to allocate more of their budgets to the medium.

 The global cinema advertising sector likely generated less than $3 billion during 2019 and likely fell more than 75% during 2020 given the absence of major studio releases in most markets around the world. Cinema is expected to witness a rebound in the post-pandemic world After the end of the pandemic, albeit to levels that are likely below 2019 levels, as studios will probably release more films directly to consumers through digital channels rather than in theaters.

Print advertising

Print advertising including newspapers and magazines, is expected to decline 25% for the year, a significant acceleration over the high-single-digit declines of recent years. However, those single-digital declines should resume following an economic recovery.  Print publications in most markets are likely to go through a vicious cycle of disinvestment in content due to an absence of advertiser support, which will lead to disengaged consumers and, thus, cause advertisers to further disengage. There will be exceptions to this trend, especially where publishers invest more aggressively in their content offerings for consumers and their marketing solutions for advertisers

Audio advertising 

Audio advertising is likely to decline by 24% during 2020 as advertisers disinvest, in part, because of the medium’s dependence on away-from-home activities, such as driving. Digital extensions, including streaming services from terrestrial stations and their digitally-oriented competitors and podcasts, still attract relatively small audiences of a few billion, but help make the broader medium more appealing to marketeers.

 

There are opportunities in this disruption for marketeers who are willing to rethink how they allocate their budgets. Share of voice gains now will likely lead to share of sale gains later, and at more attractive prices than usual. Further, shifting budgets across countries, from those facing highly negative economic trends to those less affected, may offer additional opportunities. Marketeers looking to reduce costs should ask themselves whether the hard lines they draw around spending are really working to their advantage. Marketeers should always start with improving their grasp of evolving consumer and customer needs, developing new offerings to meet those needs and investing in new ways to transact. Marketing strategies and media choices should follow from those efforts, which will render averages as meaningful only after the fact, primarily as points of reference rather than goals to aspire to.

 

RELATED TOPICS
Group M Digital Advertising Outdoor Advertising Print Advertising Cinema advertising Television advertising
MORE IN Industry
Industry
November 01, 2020 How to Build a Winning Gen Z Strategy on Mobile

App analytics and market data company, App Annie, have released a new report that sheds light on Gen Z’s mobile behavior, in order to help marketers develop effective strategies to reach them. 98% of Gen Z report owning a smartphone, on average receiving their first at the age of 10. They are also part of […]

Industry
October 28, 2020 Micro-Influencers Are Still an Important Channel in the Marketing Funnel

Experticity, the world’s largest community of influential category experts have released a new study that sheds new light on the importance of micro-influencers on the average consumer. The study was conducted with online interviews of more than 6,000 individuals from the United States drawn from Experticity’s micro-influencer network and the general population. In addition, more […]

Industry
October 28, 2020 Global Media Insight Report Provides Concise Picture of Media Trends in UAE & KSA

Market research companies eMarketer and Global Web Index have collaborated together to release the 10th edition of the global media intelligence report. The report is a detailed compilation of data and insights about internet users’ traditional and digital media usage in 42 key markets worldwide. Communicate will be highlighting the key trends that are shaping the […]

Industry
October 27, 2020 Socialbaker’s New Report Highlights Slow Return to Normalcy in Digital Space

Social Bakers, a global AI-powered social media marketing company has released the Q3 edition of their social media trends report. The report reveals where the industry is currently standing with regard to spending and engagement globally. Here are the key findings – ADVERTISING Worldwide ad spend increased by 56.4% in Q3 compared to where it […]

Subscribe to

our newsletter.

This site uses cookies: Find out more.

Logo
  • Insights
  • Industry
  • People
  • Culture
  • Brand Studio
  • Facebook Hub
  • Choueiri Group Deep Dives
  • OMD Corner
  • LEAD with ABG
  • About Us
  • Contact Us
  • Advertise With Us
  • Privacy Policy
  • Disclaimer
NEWSLETTER

Get a monthly round-up of Communicate's best insights

© 2020 communicateonline.me
About Us
Contact Us
Advertise With Us
Privacy Policy
Disclaimer
icon
icon
icon
icon
icon
© 2020 communicateonline.me