‘Tis the season for market predictions and in that spirit IPG Mediabrands’ Magna has released a forecast about the global ad market in 2020.
Diving right it, it’s expected that in 2020 the region’s ad spend will increase by 5.9%, while digital formats will continue to drive growth, reaching US$194 billion. Ad growth in APAC continues to be driven by digital formats and in 2020, digital ad spend will grow by double-digits (13%) to reach US$102 billion.
More than two-thirds of total regional ad revenue will be concentrated in the two largest markets; China (45%) and Japan (22%).
Hong Kong’s ad economy will likely recover only slightly (1.3%) next year due to ongoing protests and the subsequent economic impact. On the digital front, the city is expected to see 10% growth in 2020, a decrease of four percentage points from 2019. Digital formats still only represent 25% of total budgets, with the majority of digital spend going to video, with strong growth in app environments.
Print retains a 22% share of ad sales, one of the highest market shares globally. Television ad sales stagnated (0.3%) in 2019, and it will remain almost the same (0.4%) next year.
Meanwhile, in China, only digital and OOH are predicted to grow next year. Ad sales will increase by 7.9% to approach approximately US$85.3 billion, up from prior expectations (7.2%) due to higher digital ad spending forecasts. Digital media remains a growth engine as digital ad sales increased by an estimated 16.1% in 2019 to reach US$54 billion, 65% of total ad spend. It will grow by 14% in 2020 driven by the rise of product listing ad on top of traditional digital advertising formats. However, TV ad is declining by up to 6% per year despite strong pricing. OOH is the only linear media to show organic growth as total linear media ad sales decline by up to 3% per year in 2019 to 2020.
Globally, next year’s growth will surpass 2019’s as global ad spend increases by 5.7% while digital will climb by 11.7%, but linear will continue its recession, dropping by 0.7%.
North America will be the leading region to drive growth as it’s expected to grow by 6.5% next year. LATAM comes second (6.1%), followed by APAC (5.9%). with EMEA only showing an increase of 4.1%.
In 2019, media owners’ ad revenues grew by an estimated 5.2% to $595 billion. Global digital ad sales, including search, video, social, and display, continued to grow by double digits (15%) although it is maturing. However, it’s a noticeable slowdown compared to the 18% to 20% growth rates of the last four years.
Digital ad sales represented more than half of global ad sales for the first time this year (51.5%, equivalent to (US$306 billion). Social media continued to be the fastest-growing digital format, jumping up by 25%, nine percentage points lower than 2018, ahead of digital video (increased by 23% in 2019, down from 30% in 2018), and search (surge by 14% in 2019, down from 19% in 2018) while static display formats generated stagnating revenues. All digital ad formats are showing signs of slowing down due to the maturity of digital media consumption and digital marketing in most markets.
“The global ad market grew on par with Magna’s forecasts at around 5%, but it was the result of the US market growing beyond expectation while the rest of the world grew less than expected,” said Vincent Létang, EVP of Global Market Intelligence at Magna.
Traditional linear ad sales, such as linear TV, print, linear radio, and OOH decreased by 3.4% to US$289 billion this year, representing less than half of total ad sales for the first time (48.5%).
Global linear television ad revenues shrank by 4% this year, the poorest performance since 2009, as pricing increases could no longer offset the accelerated decline of linear audiences, especially in an odd-numbered year without cyclical events. Print ad sales declined by 10%, in line with previous years, while radio ad revenues were stable. The out-of-home ad sector was the only traditional media type to show significant growth (6%), driven by digital OOH revenues (20%).
As for this year’s regional performance, APAC market grew the most in 2019 (6.3%) ahead of North America (5.1%) and EMEA (4.3%). LATAM grew much below expectations (4.1%) due to economic crises, political uncertainty, and government spending cuts in Mexico.