Belgium went into a nationwide lockdown on March 18, though the government cancelled indoor events and encouraged companies to have their employees work from home starting on March 11. A phased re-opening began in mid-May, though sporting and cultural events will not resume until July. Real GDP is expected to contract -6.9% this year (IMF April 2020), a significantly worse decline than what was experienced during the 2009 recession (-2%).
In this context, IPG Mediabrands expects the Belgian advertising market to decline of -8,5% from 2019. Linear ad sales will drop by -14,6%, while digital ad sales will slow down from +12% in 2019 to +4.5% in 2020.
Linear TV consumption increased substantially during the lockdown. Ad from Week 21, TV consumption returned to the same level as May 2019. Meanwhile, demand from key TV advertisers has plummeted, with most of the top 20 advertisers—primarily CPG, auto, and entertainment companies—all cutting spend by double-digits. IPG MEDIABRANDS anticipates linear TV ad sales will decline by -15% for the full year, with steep declines in the first half of the year partially offset by a surge in demand in the second half.
Radio spend is also expected to decline by -10%, while print -15% and OOH will be down
Digital ad sales will be more resilient, with IPG Mediabrands anticipating modest growth (+4.5%). Digital video will see the strongest growth, +15%, driven primarily by fast-growing mobile spend. Social media follows with growth of +9%, while search will see a slight decline (-2%). Static banners will see the steepest decline, at -7%.
For 2021, economic stabilization (GDP +4.5%) should prompt advertising recovery. Belgian media owners revenues will grow by +5.1%, — still slightly below the 2019 total. Digital ad sales will reaccelerate (+11%), while OOH (+6%), radio (+6%), and television (+2%) will stabilize or recover. Print ad sales will continue to decline, though at a more gradual pace, in line with pre-COVID long-term erosion.
GLOBAL MARKET PLACE: -7% IN 2020
- Media Owner Linear Advertising Sales to Decrease by -16% Globally Amidst Global Recession While Digital Ad Sales Will Slow Down (+1%).
- Total Media Owner Advertising Revenues (Linear + Digital Formats) to Shrink by $42 billion (-7.2%) in 2020, Before Recovering +6.1% in 2021.
- EMEA Fares Worse than Other Regions with Total Advertising Down -10% and Up to -14% in Southern Europe.
- US Market Shrinks by -4% as Political Ad Sales ($5 billion) and Digital Media Resilience (+3%) Mitigate the Decline of Linear Sales (-17% Excl. Political).
- Beyond the 2020 Economic Recession, the COVID Crisis Will Have Lasting Effects on Consumption, Business Models and Marketing Expenditure.
- Media owners’ advertising revenues will decrease by $42 billion in 2020, from $582 billion to $540 billion, as advertising spending shrinks due to the severe economic recession triggered by the COVID-19 pandemic, as GDP is expected to contract between -5% and -12% across the world’s largest markets. Global advertising revenues will decrease by an estimated -7%, as the heavy, double-digit decline of linear ad sales (linear TV, print, linear radio, OOH, cinema), -16% to $238 billion, will be mitigated by the stability of digital formats: +1% to $302 billion.
- Linear television ad revenues will shrink by -12% this year, due to the weakness of demand, the cancellation of many TV campaigns and the postponement of major sports events. Print ad sales will decline by -32% while linear radio advertising revenues will decrease by -15%. Out-of-home, the most dynamic linear media channel pre-COVID is hurt by the dramatic decline in traffic and audience, in addition to the fall in demand from local and national advertisers. Global OOH ad sales are expected to decline by -22%, with the transit segment experiencing even deeper decreases. Finally, theater closures will cause cinema advertising to decline by -40% this year.
- Digital formats advertising sales (search, video, social, banners) are expected to be flat (+1% at $302 billion) as a second half recovery will offset the first half decline. Digital formats benefit from increased digital media usage during lockdown, an acceleration of e-commerce that will likely outlive the lockdown. Search will remain the largest digital advertising formats ($142 billion) but global sales will stagnate (-1%). Social media and digital ad formats will slow down from previous years but still grow single-digit this year (both +8%) while the revenues of static banner ads will fall by -11% as the COVID crisis adds to the increasing restrictions on data-based targeting.
- As the pandemic and economic crisis is global, so is the impact on the advertising market. EMEA and Latin America will experience the worst downturn, with total advertising revenues down -10%, with APAC marginally more resilient (-8.5%). North America may show more stability, partly due to the $5 billion that will be spent around the 2020 election cycle (see more details on the US market in the US section of this summary). Among the worst downturns predicted by IPG Mediabrands in 2020, among large markets, Japan and Spain (both -14%), France (-13%) and Italy (-15%). India (+2%), China (-6%) and the US market (-4%) will be less dramatically affected.
- The 2Q lockdown has prompted some dramatic changes in media consumption. Linear TV viewing increased by 10% to 40% during lockdown but IPG MEDIABRANDS anticipates a return to long-term erosion in the second half. Streaming video, SVOD and OTT consumption also accelerated further during lockdown. The impact on audio media varied by market but radio struggles where car commuting represents a large part of daily audience. Finally, OOH suffers from driving mobility and transit mobility down -60 to -80% in North America and Europe in 2Q and only the former showing significant recovery by June.
- In 2021, the global economy recovers (real GDP +5.8% according to the IMF) and major sports events (Summer Olympics, UEFA Football Championship in Europe) will fuel a recovery in marketing budgets and advertising spending. IPG Mediabrands predicts global ad spend to grow by +6.1% to $573 billion (EMEA: +7.1%, APAC: +8.1%, LATAM: +6.7%, NA: +4.0%). Despite the forecast recovery, the global market place will remain $9 billion smaller than its pre-COVID level.
TABLE 1: NET ADVERTISING REVENUES – KEY REGIONS
|NAR – YOY GROWTH||2019||2020||2021|
|WORLD (INCL. CE)||5.4%||-7.2%||6.1%|
|WORLD (EXCL. CE)||6.5%||-7.8%||6.4%|
|CENTRAL & EASTERN EUROPE||6.8%||-7.7%||7.6%|
Source: MAGNA, June 2020