Worldwide Ad marketplace to Witness 7% Decline in 2020

Advertising revenues includes linear and digital formats will decrease in 2020, as per a new report from Magna.

A latest report from Magna says advertising revenues for media owners from linear ad sales will fall by 16% in 2020, while a 22% decline is projected for out-of-home sales. The 2021 ad revenue forecast will increase by 6.1% to $573 billion. Digital advertising sales that comprise search, video, social, and banners are also expected to increase by 1% to $302 billion, the report notes. The spike in ad sales will be attributed to changing consumer habits amid COVID- 19 and significant rise in the use of streaming video and e-commerce.

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According to the report, ad sales volume could decline by 7.2% in 2020. A separate report from Digiday recently revealed that Facebook, Snapchat, and YouTube are demanding higher cost per mille (CPM) as compared to April. Various social media platforms witnessed a decrease in demand from advertisers during the initial stage of the pandemic; however there was also an increase in the usage and a higher engagement is expected to stay going forward.

The linear advertising landscape, which was struggling before the pandemic is declining further owing to increasing consumer digital usage during lockdowns. When it comes to ad revenues, digital ad remains strong due to more and more consumers spending time online.

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The report has reduced its three-year advertising industry growth forecast to 3.5% per year while the global ad market could be 14% smaller than earlier forecast. The COVID crisis is set to have global and long-term effect on society, business models, consumption habits, mobility, and media usage. The effect is going to be much larger than the current short-term V-shaped recession impact on the economy and the advertising market. All these factors indicate towards a more subdued economic growth and advertising spend for the 2022-2024 period.

The U.S. ad business is expected to grow as compared to other regions due to the upcoming presidential election. The increasing unemployment and social unrest will also affect consumers buying spend which will result in advertisers cutting back. The remainder of 2020 will continue to witness media disruption and at the same time, the market could see launch of several ad-supported video streaming services.

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