By JEANINE POGGI. Published by AD AGE on 15 June 2020.
U.S. ad revenue now expected to decline 4.3 percent this year, following March forecast of 2.8 percent drop
Magna is further slashing its ad sales outlook for 2020 in the wake of the coronavirus pandemic. The agency now expects a 4.3 percent decline in U.S. revenue to $213 billion, down from its forecast in March of a 2.8 percent drop in ad revenue this year.
On a global basis, Magna now predicts a 7 percent decline in ad sales. In December, the agency had forecast 5.6 percent increase.
There will be long-term repercussions of COVID-19 on the global ad market through 2024, and Magna reduced its forecast for 2022-224 to 3.5 percent growth per year, from 4.5 percent.
Linear ad sales for TV, radio, print and out-of-home are expected to suffer the most, with Magna predicting the category will fall 13 percent to $83 billion in the U.S. in 2020.
While linear TV experienced a surge in viewing consumption for about eight weeks in the height of the pandemic, those levels were mostly back to normal by early June, says Vincent Létang, exec VP, global market intelligence at Magna, and author of the report.
National TV ad revenues are expected to shrink by 13 percent this year; print ad sales will plunge by 26 percent; radio ad revenue is expected to be down by 17 percent; out-of-home will decrease by 17.5 percent; and cinema ad sales will topple 36 percent, according to Magna’s report.
Digital ad spending is expected to stabilize in the summer and recover in the second half, ending the year up 2 percent to $130 billion. The space benefited from an increase in digital media usage during the lockdown and an acceleration of e-commerce that is expected to outlive social distancing, Létang, says.
Digital video will be one of the most resilient formats, expected to grow 10 percent, as well as social media.
But even this growth still represents a significant slowdown compared to the double-digit growth rates in digital advertising of previous year.
The 2020 election cycle will generate $4.8 billion in incremental ad sales, up 24 percent from the 2016 election and hitting an all-time high. This is expected to significantly mitigate the decline of ad revenues in 2020.
Moving into 2021, Magna expects U.S. advertising sales to rebound, gaining 4 percent to $222 billion. However, the U.S. ad market will still be slightly smaller than it was in 2019 when it brought in $223 million.