IPG MEDIABRANDS ADVERTING FORECAST DECEMBER 2019
GLOBAL MARKET PLACE
- Media owners advertising revenues grew by an estimated by +5.2% this year, to $595 billion This is in line with MAGNA’s previous forecasts for global full-year growth (June 2019: +5.0%).
-Digital advertising sales (search, video, social, display) continued to grow by double digits, although it matured somewhat, as predicted by MAGNA: +15% this year globally. It’s a noticeable slowdown compared to +18% to +20% growth rates of the last four years. Digital ad sales will represent more than half of global ad sales for the first time this year: 51.5% ($306bn).
- Social media continues to be the fastest-growing digital format (+25% down from +34% in 2018) ahead of digital video (+23% down from 30%), and search (+14% down from +19%) while static display formats generate stagnating revenues. All digital ad formats are slowing down due to the maturity of digital media consumption and digital marketing in most markets.
- Search remains the #1 digital format with 47% of total digital ad revenues ($144 billion) as brands re-allocate parts of their trade marketing budgets from brick-and-mortar retail to product search on ecommerce platforms.
- Traditional linear ad sales (linear TV, print, linear radio, OOH) decreased by -3.4% to $289 billion, 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 increase can no longer offset the accelerated decline of linear audiences, especially in an odd-numbered year without cyclical events/drivers. Print ad sales declined by -10% in line with previous years while radio advertising revenues were stable. Out-of-home advertising was the only traditional media to show significant growth (+6%), driven by digital OOH revenues (+20%).
- Ad spend grew in 62 of the 70 countries analyzed by MAGNA, including all the top markets this year: US +5%, China +9%, Russia +7%, India +13%, UK +7%, Germany +2%. Among the markets that did not grow in 2019, several Asia and Latam countries where the economy suffers from ripple effects of the US/China trade war and/or domestic unrest (Peru, Chile, Malaysia, Vietnam, Lebanon).
- 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 (Mexico).
- Global advertising spend has now been growing for ten consecutive years (2010-2019) and MAGNA forecasts more growth in 2020: total +5.7%, linear -0.7%, digital +11.7%. North America will grow by +6.5%, APAC by +5.9%, EMEA by +4.1% and LATAM by +6.1%.
- The return of cyclical events (US Elections, Summer Olympics, Europe’s Football Championship) will mitigate the impact of the global economic slowdown. MAGNA estimates that cyclical events will generate more than seven billion dollars of extra ad spend in 2020 i.e. a 1.1% uplift. Excluding the impact of cyclical events, the normalized global market growth would be +4.6% in 2020 instead of +5.7%, down from +6.3% in 2019 and +6.8% in 2018.
BELGIUM: 2019: +1.8% / 2020: +1.2%
The Belgian advertising market will grow to 2.6 billion euros in 2020, up 1.2% over 2019. Digital advertising sales will see the most significant gains, +12% to 900 million EUR, while linear ad sales will decline by 4%.
After several years of growing by around 14% per year, digital advertising sales will decelerate in 2020 (+12%), in line with the general European trend. Social (+19%) and video (+17%) formats will see the strongest growth, to 520 million EUR, nearly 60% of total digital revenues. Digital market share of 35% (2020) is relatively low compared to the regional average of 53%, suggesting room for continued strong growth.
Television ad revenues will be down by -4% in 2020, following a decline of -2% in 2019. Lack of cyclical events, in combination with general softening demand from key verticals like personal care and retail, contributes to the downward trend following growth of +2% in 2018. Audience fragmentation continues to be an issue for TV as SVOD services become increasingly popular, especially with younger audiences. SBS Belgium began running addressable TV tests in early 2019, with services expected to be rolled out nationally within the near future.
Print sales continue to decline, falling to a combined 370 million EUR in 2019, 14% of total NAR. Print sales are expected to fall again in 2020, with -6% anticipated for both newspapers and magazines.
Radio spend will be flat at 360 million EUR, around 14% of total NAR (one of the highest radio shares in the world). Belgian radio achieves high national daily coverage (75%) for low ad production cost, which contributes to its enduring attractiveness among key industry segments, including auto, retail, and finance.
OOH spend will decline in 2020 (-3%), with traditional, static OOH sales expected to shrink by -6% while digital OOH will grow by +10% to 30 million EUR, 20% of total OOH NAR. Telecom, auto, and beverages are typically among the top spenders for OOH. Car sales began to decrease in 2019 following four years of consecutive growth (sales down -2.2% in Jan-Sept), which could have a negative impact on demand for formats like OOH and radio if auto brands start to cut spend in response to declining consumer sales.
WESTERN EUROPE OVERVIEW: 2019: +3.7% / 2020: +3.3%
ADVERTISING GROWTH SLOWS DOWN AS DOMESTIC POLITICAL INSTABILITY AND GLOBAL TRADE WARS HURT ECONOMIC GROWTH AND BUSINESS CONFIDENCE
Media owners advertising revenues grew by an estimated +3.7% in 2019, to $117 billion, a noticeable slowdown from 2018 (+5.7%). MAGNA monitors 16 markets in “Western Europe”: Norway, Finland, Denmark, Sweden, Portugal, Spain, Italy, Greece, Switzerland, Austria, France, Germany, Ireland, Belgium, the United Kingdom and the Netherlands. MAGNA forecasts further slowdown in 2020 (+3.3%) as deteriorating global economy, trade conditions and domestic political uncertainties are hurting business confidence and marketing spend in several major markets in many regional markets.
Linear advertising sales (broadcast TV and radio, ad pages in newspapers and magazines, OOH and cinema) shrank by -2.9% and are expected to decline by -2.6% in 2020. Linear television ad revenues performed below expectation in 2019, with MAGNA estimates pointing to -2.5% to EUR 27.3 billion. The linear viewing erosion is accelerating to high-single digit almost everywhere and airtime pricing inflation can no longer offset the decline in volume due to the weakness of demand in several key verticals, including automotive. MAGNA revises its 2020 forecast downwards for European television (-1.6%). The UEFA football tournament will be a minor driver in some markets (UK, France…).
Elsewhere, print advertising are expected to decrease by -7.6% in 2019 and 2020 to reach $16.8 billion by end 2020 (a 14% market share). Radio ad revenues are predicted to be stable around $5bn (+1% in 2019, +0.3% in 2020). OOH ad sales are growing more than expected as media owners ripe the benefits of their digital investments: The Western Europe market grew by an estimated +4.6% in 2019 and MAGNA anticipates +3.1% in 2020 to bring the market to an all-time high of 2.5% to approach $7.3 billion.
Digital advertising sales (search, digital video, social, display) increased by an estimated +11.2%. This is a slowdown from the four previous years (average annual growth of +15%) that was expected by MAGNA given the maturity of digital media consumption and marketing usage in the region: digital advertising now for 50% of total advertising in the region for the first time. Social media was, yet again the fastest growing digital advertising format throughout Europe (+20%) following by digital video (in-stream and out-stream: +19%) and search (+11%). MAGNA anticipates that the maturation of digital media will continue in 2020 as regional digital growth will go into single-digit (+9.6%).