Global magazine advertising expenditure will shrink by 20 per cent in 2020, according to Zenith’s latest Advertising Expenditure Forecasts which take into account ad spend during the height of the COVID-19 pandemic.
Zenith’s most recent Advertising Expenditure Forecast outline COVID-19’s impact on the global advertising industry, with total advertising expenditure across all media channels expected to decline by 9.1 per cent in 2020.
To compare, Zenith said that adspend shrank by 9.5 per cent during the 2009 recession.
Zenith said that the COVID-19 crisis “exacerbated the long-term decline of print advertising as newspaper adspend is forecast to shrink by 21 per cent globally this year and magazine adspend drops 20 per cent”.
Zenith’s forecast for magazines and newspapers is based only on publishers’ advertising revenues from print publications, omitting their revenues from digital publications (instead these are calculated under the ‘digital advertising’ category).
The forecast predicts that magazines and newspapers will take time to recover, with ad spend in both continuing to decrease next year.
Zenith’s Head of Forecasting Jonathan Barnard “The coronavirus forced brands to embrace digital advertising even faster than expected and made digital transformation of businesses more urgent than ever.
“This year will be the first in which digital advertising will attract more than half of total global adspend, a milestone we previously expected in 2021.”
5.8 per cent global advertising expenditure recovery forecast for 2021
Zenith said that advertisers pulled back spending quickly when the scale of the coronavirus crisis became clear.
The steepest declines took place between March and May, with timing varying by country. The analyst says that these declines have now started to ease and are expected to gradually moderate over the rest of the year, with a 5.8 per cent recovery in global ad spend in 2021.
In particular, Asia Pacific is forecast to shrink by 8 per cent over the coming year, while advertising markets in Western Europe, Latin America and the MENA region are expected to shrink by between 13-20 per cent. The differences are largely due to the regions’ ability to control the spread of COVID-19 throughout their communities.
COVID-19 accelerated the move to digital advertising
Consumption of digital media spiked in the early weeks of lockdown, Zenith found. Although both are now trending down again, they are not expected to retreat to pre-crisis levels any time soon.
Together with the rise of e-commerce and data, this has driven a rapid shift in media budgets from traditional to digital media, accelerating the trend that was already taking place.
Zenith now forecasts that digital advertising will account for 51 per cent of global ad spend this year, up from the 49.5 per cent it forecast in December.
“Digital ad budgets were cut quickly in the crisis’ first phase, given [they are] generally easier to cut without penalty. But as time progressed, brands allocated more budget into digital channels to take advantage of their flexibility and ability to optimise performance, particularly important qualities in an uncertain time,” said the company.
Digital adspend is forecast to shrink by just 2 per cent across 2020 as a whole. Zenith does not expect any of this share to return to traditional media as the crisis eases – digital advertising’s market share is forecast to reach 54.6 per cent in 2022.
E-commerce boom will affect retail sales
Following the COVID-19 pandemic, Zenith said that e-commerce has become a lifeline for consumers, “providing the goods they need while unable or unwilling to visit bricks-and-mortar stores,” with many consumers making permanent changes to their shopping habits.
According to global research by Criteo, in recent months 53 per cent of consumers have discovered at least one form of online shopping that they plan to continue.
Locally, Australia Post has estimated that it delivered $2.4 billion in online goods during the height of the COVID-19 crisis through its parcel delivery service.
Zenith says that because of the e-commerce boom, retail footfall will be subdued for months, if not years, to come.
“This has forced brands to accelerate digital transformation efforts and made it critical to have a robust commerce strategy in place, either direct-to-customer or through retail partners.”
First-party data is king
The crisis also raised the value of first-party data for brands.
Zenith said that the powerful insights and competitive edge first-party data gives brands about its customers’ behaviour will allow them to navigate the changes to consumer behaviours and attitudes as the crisis develops, and identify when it’s time to start investing for the upturn.
“Brands need to show consumers that they understand their rapidly evolving needs in this uncertain time,” said Christian Lee, Managing Director, Zenith Worldwide.
“So we are helping our clients integrate their data, digital communications and e-commerce approaches, and leverage them more deeply, to deliver personalised experiences throughout the fast-changing customer journey.”
