The United States ad market has proven more resilient than anticipated thanks to record political ad spending in the run-up to the 2020 election.
Still, US ad spend will decrease 7% this year to $236 billion due to the impacts of COVID-19, according to Zenith’s global ad spend forecast, released on Monday.
Without political ad spend, the US market would have declined between 10% and 11% this year, said Jonathan Barnard, head of forecasting at Zenith.
“We’re expecting this to be a record year in US political spend,” he said. “That’s helping to make up for the loss of the Olympics.”
Global ad spend will decline 9% this year to $572 billion, down from $630 billion in 2019. Zenith predicts of the global ad market will grow 5.8% in 2021 to $606 billion, assuming the COVID-19 vaccine will be widely distributed next year.
“It's been quite hard to calibrate where our expectations should be for the year, since it’s such a completely unprecedented situation,” Barnard said. “This is our best guess for now, but that could change in the future.”
But for this year, Zenith predicts ad spend will decline in every major region, including Asia (-8%), Western Europe (-15%) Central and Eastern Europe (-8%) Latin America (-13%) and the Middle East and Africa (-20%).
While the ad market was hit hardest in Q2, clients are starting to spend again in areas such as ecommerce and digital transformation, Barnard said. In China, for example, ecommerce spend will grow by 56% this year, compared to 11% last year.
“Ecommerce is a lot more mature in China than basically every other market,” Barnard said. “But we definitely expect that same sort of acceleration [in other markets] this year.”
Marketers cut their digital budgets at the outset of the pandemic because digital media is easier to cancel. But as lockdowns dragged on, brands began shifting more budget toward digital, and traditional media sustained long-term cut backs.
Digital will surpass 50% of global ad spend this year, and Zenith predicts digital will make up 55% of global ad spend by 2022. Overall, digital ad spend will shrink just 2% in 2020.
Within digital, paid search declined 2% this year to $17.3 billion in the US, as brands tried to increase their visibility among consumers adopting new habits during the pandemic. Display and social media were both roughly flat in the US, declining 1% to $21.2 billion and $36.5 billion, respectively.
Meanwhile, print revenues will decline much faster globally this year, with newspaper revenues down 21% and magazine revenues down 20%, compared to previous forecasts of 8% and 9% declines, respectively. Out of home and cinema advertising will bear the brunt of the impact, with 25% and 51% decreases, respectively.
“They are going to have a very tough time until governments have got a good grip on the threat of the virus and people can be confident about going out in public again,” Barnard said.
TV and radio ad spend will fare slightly better, down 11% and 12% globally, respectively. Zenith expects growth in these mediums to be flat in 2021.