Digital adspend in Australia is expected to drop 8% in 2020 but will be the quickest medium to recover, according to Zenith’s latest advertising expenditure forecasts.
The coronavirus is accelerating to takeup of digital adspend and by 2022 it will represent 61% of the total in Australia.
“By ‘forcing’ adoption of online services, COVID-19 and its associated lockdowns have exposed and normalised digital usage across a range of functions and practices that were not previously widespread, such as working from home," says Zenith Sydney’s head of investment, Elizabeth Baker.
"As online media consumption continues to grow and the economy stabilises, we will see digital ad revenue growth accelerate once again, with digital recovering the fastest among all media.”
In Australia, the overall decline is estimated at 11% in 2020. And the market won't see a bounce back in 2021 and 2022. By 2022, Zenith anticipates the overall market being back 8% compared to 2019.
Zenith forecasts the global adspend drop at 9.1% this year, a little below the 9.5% of the 2009 recession.
Advertisers pulled back spending sharply when the scale of the coronavirus crisis became clear with the steepest declines between March and May, with timing varying by country.
These falls have now started to ease and are expected to gradually moderate over the rest of the year.
Zenith forecasts a 5.8% recovery in global adspend in 2021, boosted by the rescheduled Summer Olympics and UEFA Euro 2020 football championship.
The US has been relatively resilient, benefiting from record political spending in the run-up to the Presidential elections in November.
US adspend is expected to fall by 7% this year.
Asia Pacific is forecast to shrink by 8%, thanks to the success of some markets in keeping the virus under control.
Advertisers in Western Europe cut spend aggressively in Q2, and adspend is forecast to shrink by 15% there. Zenith forecasts 8% decline in Central and Eastern Europe and 13% in Latin America .
Ecommerce and retail
Recent data on Australia -- historically a slow adopter of online shopping -- demonstrates the trend is picking up.
The NAB online retail sales index showed 28% growth in March, 58% in April and 50% in May.
But the retail footfall will be subdued for months, if not years, to come. This has forced brands to accelerate digital transformation.
“Brands need to show consumers that they understand their rapidly evolving needs in this uncertain time,” says Christian Lee, managing director, Zenith Worldwide.
“So we are helping our clients integrate their data, digital communications and ecommerce approaches, and leverage them more deeply, to deliver personalised experiences throughout the fast-changing customer journey.”
Zenith now forecasts that digital advertising will account for 51% of global adspend this year, up from the 49.5% it forecast in December.
Digital ad budgets were cut quickly in the crisis’ first phase but as time progressed, brands allocated more budget into digital channels to take advantage of flexibility and ability to optimise performance.
Digital adspend is forecast to shrink by just 2% across 2020 as a whole. Zenith does not expect any of this share to return to traditional media as the crisis eases – digital advertising’s market share is forecast to reach 54.6% in 2022.
The recovery of traditional media will be patchy and underpowered.
Among traditional media, television and radio suffered the least, expected to end the year only slightly below the market, with 11% and 12% respective declines.
The crisis exacerbated the long-term decline of print advertising as newspaper adspend is forecast to shrink by 21% globally this year and magazine adspend drops 20%. Note, newspaper and magazine advertising here includes only the publishers’ advertising revenues from printed publications; their revenues from digital publications are included in digital advertising.
Out-of-home and cinema have suffered the most from government restrictions on movement, and consumers’ avoidance of public places. Out-of-home advertising is forecast to shrink by 25% in 2020 and cinema by 51%.
No recovery is forecast for newspapers or magazines, with adspend in both continuing to decrease next year.
Television will lift 2% and radio 1%.
Out-of-home and cinema growth will be stronger as they compensate for much greater declines this year. Zenith forecasts 16% growth for out-of-home and 65% growth for cinema, but neither will return to 2019 peaks by 2022.
“The coronavirus forced brands to embrace digital advertising even faster than expected and made digital transformation of businesses more urgent than ever,” says Jonathan Barnard.
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