The Passage Of Time Has Consequences

Michael Hedges June 24, 2020 Follow on Twitter

The great economic, if not social, unknown is the future. Almost anything about the future - two months, six months, two years - is up for grabs. As such we grasp at every forecast of anything. Mostly there is disappointment.

In other times ad spending would reinforce other economic data bits. A lagging indicator, smart people have said, reflects consequences. Another lagging indicator is unemployment rate. Retail sales is considered a leading indicator. Today smart people are saying wear masks, wash your hands and buy gold.

Big global media buyer GroupM is out with its regular ad spending forecast. The force that drives the ad business and a significant portion of the media world will decline this year by 11.8% to US$517.5 billion. Worry not, they say, ad spending will jump 8.2% next year and will be back to “normal” in 2022.

A big takeaway from the mid-2020 forecast is the triumph of digital advertising. From this year forward more than half of all ad spending will be with digital media; 53.7% in 2020 growing to 59.7% in 2024. All traditional media will suffer, though forecasts for out of home advertising (outdoor and cinema) show longer term stability.

The projected trends for newspaper and magazine advertising are bleak but hardly a total surprise. Print advertising has been drifting lower for years. In 2012 newspaper advertising made up 18.7% of the total ad pie; magazine ads were 9.4%. The GroupM forecast sees 4.1% going to newspapers by 2024, 1.9% for magazines. Publishers never liked selling ads anyway.

The TV advertising slice of the big pie has also been shrinking as ad-free alternatives - pay TV followed by subscription streaming - stripped away audiences, greying the allure of the living room screen. Globally, TV took 37.8% of the ad pie in 2012. If these forecasts hold true, that could drop to 24.2% by 2024. Radio advertising, long rather stable, might drop to 3.9% of total spending by 2024 from 7.5% in 2012. GroupM now reports radio and podcasts together as audio.

The country-by-country estimates for 2020 ad spending abused both the traditionally strong ad markets and the developing. The widely-watched US ad market is expected to fall by 12.9%, although that estimate does not include the quadrennial presidential election spending fest. Adding in the expected US$15 billion for this cycle’s political advertising, the US total only drops 7.5%.

Through the 2008/2009 recession US ad spending contracted 16%, noted GroupM business intelligence head Brian Wieser to Deadline (June 16). The difference, he explained, is that small businesses are bearing the brunt of the coronavirus recession and they - small retailers, restaurants and hotels - don’t spend that much on advertising. “If you’ve been hitting yourself on the head with a hammer and you switch to a rubber mallet, it feels pretty good.”

The Chinese ad market, the world’s second largest, is forecast to drop only 2.8%. For South Korea the expected drop is a barely negligible 1.8%. Ad spending in Japan is expected to fall by a painful 20%, certainly affected by the loss of the Tokyo Summer Olympics this year. Ad spending in Indonesia will be off 5.8%. Elsewhere, ad spending in Brazil if forecast to drop 29.1%, Spain 20%, Australia 19%, France 15%, UK 12.5% and Germany 9.9%.

But the 2021 rebound will be dramatic, said GroupM’s “This Year, Next Year” forecast report. The big exception is the US market, which is forecast to be 0.9% lower in 2011. “The rebound will be more dragged out in a market that has managed this crisis worse,” said Mr. Wieser.

See also...

• Hot Topics - Ad Spending

Media in Spain - Diverse and Challenged – new

Media in Spain is steeped in tradition. yet challenged by diversity. Publishers hold great influence, broadcasters competing. New media has been slow to rise and business models for all are under stress. Rich in language and culture, Spain's media is reaching into the future and finding more than expected. 123 pages, PDF. January 2018

Order here

The Campaign Is On - Elections and Media

Elections campaigns are big media events. Candidates and issues are presented, analyzed and criticized in broadcast and print. Media is now more of a participant in elections than ever. This ftm Knowledge file reports on news coverage, advertising, endorsements and their effect on democracy at work. 84 pages. PDF (September 2017)

Order here

Fake News, Hate Speech and Propaganda

The institutional threat of fake news, hate speech and propaganda is testing the mettle of those who toil in news media. Those three related evils are not new, by any means, but taken together have put the truth and those reporting it on the back foot. Words matter. This ftm Knowledge file explores that light. 48 pages, PDF (March 2017)

Order here

More ftm Knowledge files here

Become an ftm Individual or Corporate Member to order Knowledge Files at no charge. JOIN HERE!