By SARA JERDE. Published by ADWEEK on 15 June 2020.
The latest predictions from Magna include an $11 billion drop in ad revenue for media owners in 2020
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, but the ad market is expected to recover in 2021.
The revised economic fallout from the coronavirus was outlined in the latest ad forecast released today from Magna Global, the media strategy arm of IPG Mediabrands.
Overall, the company predicted “more subdued economic growth and advertising spend” than previously forecast for 2022 to 2024, said Magna evp of global market research Vincent Letang, who authored the report.
In the short term, total media owner ad revenues in the U.S. (among linear and digital properties) are forecast to decrease to $213 billion in 2020 from $224 billion in 2019.
The broader U.S ad market is only expected to decrease by 4% as political ad sales (projected to be $5 billion) and digital media help mitigate the decline forecast for linear sales (expected to decrease by 17%, excluding political ads).
While consumption on linear TV initially saw a surge as stay-at-home orders went into place mid-March, viewing leveled out in April.
In contrast, digital ads benefited from the increase in screen time, and ad spends in this sector (including search, video and social) will stabilize this summer and recover in the second half, according to the forecast.
Overall, digital advertising is now projected to grow 2% year-over-year, but digital video is expected to grow 10% and social will grow 7%.
That’s good news, especially for publishers, who could benefit from the changing trends in advertising. Already this year, most publishers reported downward trends in digital advertising, in part due to brand safety concerns over messaging appearing next to Covid-19 coverage.
Before this recovery, though, Magna is expecting “precipitous” declines in the second quarter, especially among local TV (30%), radio (34%) and print (40%).
“Beyond the short-term V-shaped recession/recovery impact on the economy and the advertising market, the Covid crisis will have global and long-term effects on society, business models, consumption habits, mobility and media usage,” Letang said.
Overall, the ad market in the U.S. is projected to stabilize in the third quarter and recover in the fourth quarter. If so, that’s a win for media organizations that were able to offer pay cuts and make other temporary changes to avoid layoffs, betting that the market would come back with a roar by the end of the year.
The U.S. ad market is now expected to rebound in 2021, with a 4% gain.
Magna had previously predicted the global ad market would grow to $745 billion by 2021. It’s now forecasting that it will only reach $647 billion by then.