Zenith adspend forecast: Ecommerce and video fuel faster recovery


• Australia adspend to be down 12% in 2020, will grow 8% in 2021

• Adspend is now forecast to shrink 7.5% in 2020, compared to July’s 9.1% forecast
• The pivot to ecommerce will drive 1.4% growth in digital adspend
• Connected TV advertising to drive online video
• Retailer media to grow 46%

The global ad market has recovered more rapidly than expected from the severe slump in Q2 caused by the coronavirus pandemic and is now forecast to shrink by 7.5% to US$587bn across 2020 as a whole, according to Zenith’s Advertising Expenditure Forecasts. This is a marked improvement on Zenith’s forecast of a 9.1% decline in July.

Zenith predicts that global adspend will grow by 5.6% to US$620bn in 2021, boosted by the favourable comparison with 2020, as well as the delayed Summer Olympics and UEFA Euro football tournament. Despite this bump, spending will remain below the US$634bn spent in 2019. In 2022, adspend will grow by 5.2% to reach US$652bn, exceeding 2019 by US$18bn, though it will be about US$70bn lower than it would have been if it had remained on its pre-pandemic track.

In Australia, the estimated decline is forecast to be 12% in 2020. It’s not expected that 2021 will represent a bounce back to pre-COVID levels at a total market level. Zenith is forecasting an 8% growth in 2021.

By 2022, Zenith anticipates the overall market being back to 2019 levels, although this will vary by channel and will be largely driven by digital revenues. BVOD will continue to see exponential growth and will account for 10% of TV network revenue by 2022, although it will not negate the losses linear TV experienced in 2019.

The channels that have been directly impacted by COVID-19 restrictions – cinema and OOH – will see double-digit increases next year, as will linear radio. However, ad spend in these three channels may not fully return to pre-COVID levels until 2023.

Zenith Australia’s national head of investment Elizabeth Baker said: “We’re expecting that the New Year will start showing growth across most media, as the market starts to claw back on this year’s losses. However, we don’t expect the 2020 drop to be fully mitigated before 2022 at best. Digital investment will lead the growth, with consumption accelerated throughout this pandemic.

Commenting on the outlook, Seven’s network sales director Natalie Harvey said: “The shape of the categories that make up the ad spend market in Australia will change. Big international travel brands will be replaced by state-based tourist organisations and local operators. E-commerce will continue to fire really hard and we will also see some tradition bricks and mortar retailers going very hard as well as Australian’s look to improve their homes they are going to be spending a lot of money to do that.

“Cinemas and outdoor should rebound very well considering the base they are coming off.”

Zenith said its forecasts assume that the global economy will start a sustained recovery as Covid-19 vaccines are introduced in 2021, and are subject to the wide uncertainty over how rapid this recovery will be.

Digital transformation is rapidly shifting budgets to digital advertising

Zenith predicts that global digital adspend will rise 1.4% in 2020, and increase its share of total adspend to 52%, up from 48% in 2019. The pandemic has forced brands to step up their digital transformation, as ecommerce has proved a vital tool for maintaining relationships with existing customers, mitigating the loss of in-store sales, and even finding new customers.

The growth of ecommerce is not expected to reverse once the world starts to recover from the coronavirus pandemic. Now that brands have proved the value of digital transformation under stress, they are likely to press ahead with it enthusiastically, devoting even more of their budgets to digital advertising. Zenith forecasts that digital advertising will account for 58% of global adspend by 2023.

Advertising on connected TV is compensating for the rise of SVOD

Consumers’ viewing habits have been evolving for years, but 2020 saw a real step change as online video platforms benefited from a long-term boost to awareness and demand. Forced to spend much more time at home, consumers flocked to existing SVOD platforms like Netflix, which added 25 million new subscribers in the first half of the year, and new ones like Disney+, which achieved its five-year growth target in just nine months.

Importantly for advertisers, who are locked out of SVOD platforms, demand for ad-funded video on demand (AVOD) has been even stronger, especially on connected TV sets. Between January and April 2020, the reach of SVOD services on connected TV in the US rose by 5%, but the reach of AVOD services rose by 9% to 58.5 million households, or 48% of the total.

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