GroupM’s recently released its worldwide media forecast for 2020. According to the GroupM’s report in 2020 and beyond the advertising industry should anticipate a slowdown in advertising growth as the global economy weakens.
About the GroupM Worldwide Media Forecast for 2020
GroupM’s worldwide media Forecast for 2020 was compiled by Brian Wieser, who joined the WPP company as global president of business intelligence in February. According to the report, global advertising (excluding U.S. political advertising) will end this year with 4.8 per cent growth, down from 5.7 per cent in 2018. Group M’s report also predicts global advertising will decelerate further in 2020 and 2021, coming in at a pace of 3.9 per cent and 3.1 per cent, respectively. Growth is expected to range between 3 per cent and 4 per cent through 2024.
According to the report, the reason for this sluggishness is due to a weakening global economy. “Although much worse than recent years, we note that this would amount to a similar pace of growth to what was observed during 2012-2014,” the report states.
The report estimates the total advertising market to be worth $628 billion in 2020, excluding outlays on direct mail and directories globally, which would raise that amount to $700 billion.
The U.S. remains the largest global advertising market, with $246 billion in spending, GroupM says. However, growth in U.S. advertising will constrict from 7.6 per cent in 2019 to 5 per cent in 2020 and 3.4 per cent in 2021, the report finds.
Broken down by channel, the report states that “internet-related advertising is now unambiguously the most important medium globally.” It forecasts $326 billion in digital ad revenue during 2020, up from $294 billion in 2019. Digital will account for 52 per cent of total global ad tally in 2020, the report finds, representing a speedy growth clip of 11 per cent.
TV advertising global growth rate will decline to 3.6 per cent in 2019, the report says, excluding U.S. political advertising (and 5.5 per cent including it). GroupM predicts just below $170 billion in global TV ad revenue through 2024. But while its median growth rate was just 0.1 per cent in 2019, the report predicts TV outlays to increase to 1.8 per cent in 2020, “illustrating that there are many countries where TV advertising is still growing.”
The streaming effect
Streaming continues to gain steam. Netflix accounts for 37 per cent of all streaming consumption on TV in the U.S., says the report, quoting Nielsen. The GroupM report suggests that Netflix has a 5 per cent share of viewing based on the Nielsen data. The company is expected to spend $3.5 billion this year on content production and $5 billion by 2024, per the report. Paired with spending on Hulu, Disney is also anticipated to spend $5 billion annually on content for Disney Plus by 2024.
“For the media industry, the question is what media owners’ tolerance for margin erosion will be,” the report says. “For advertisers, some elements of television will worsen because ad inventory is likely scarcer, and reach is likely harder to come by. On the other hand, where advertising does exist in this new world—and many streaming services will embrace advertising as an element of their financial models—it will likely reach more engaged consumers, in potentially more valuable environments.”
Combined, TV and digital make up 80 per cent of all advertising, the report says, leaving out-of-home, print and radio.
Ups and downs
Outdoor holds the most promise of the three with $39 billion in global ad revenue in 2019, according to the report. It predicts out-of-home growth will slow from 5.3 per cent in 2018 to 1.8 per cent in 2019, and then pick back up a bit with a growth of 2.5 per cent in 2020.
Radio, worth $31 billion in activity this year, will decline 1.1 per cent in 2019 globally and grow a modest 1.8 per cent in 2020, excluding U.S. political advertising, according to the report. It says print “still struggles,” with newspapers estimated to account for $39 billion in ad revenue in 2019, down 11 per cent from 2018. Newspapers are estimated to decline by 10 per cent every year going forward. Magazines face a similar threat, with the report estimating a decline of 10 per cent in 2019.
The takeaway? “Despite these generally unfavourable growth trends, all marketers should regularly assess the opportunities to use media beyond television and pure-play digital in their campaigns,” the report says. “Just because a medium is growing slowly or declining does not mean it cannot be impactful for a marketer now or in the future.”