Asia Pacific has been less affected than other regions by the COVID-19 pandemic and economic recession. This is a combination of strong economic resilience in China (GDP +1.9%), offsetting weaker performance in Japan (-5.3%) and India (-10.3%)
MAGNA is the centralised IPG Mediabrands resource that provides strategic investment and media
intelligence for agency teams and clients.
In its report on 'MAGNA Advertising Forecasts- December 2020', it reveals that the global advertising market place shrank by -4.4% to $569 billion amidst the COVID-induced recession, but some markets (US, China) proved more resilient than initially feared, thanks to the scale and resilience of digital media formats (+8%)
India, going into 2020 was already experiencing a tangible slowdown in economic activity. With the outbreak of the COVID-19 pandemic in the spring, economy and all businesses had a free fall. The first coronavirus case in India was confirmed on January 30 and by March 24 all of India was under lockdown, which lasted until mid-May.
|KEY FINDINGS |
- The Indian ad market contracted by an estimated -15.8% in 2020, following several years of double-digit growth. The lowest ever growth was in 2012 when the industry grew by +5.1%.
- Digital media is the only media type that managed to grow ad sales (+10.3%) to the point that it is now on par with television advertising (248 billion rupees – 37% market share for each).
- All media formats will return to growth in 2021 with total ad sales increasing by +26.9%, one of
the strongest growth rates expected by MAGNA in world next year.
Phasing out restrictions began in a calibrated manner starting June 1 and all services opened up with the November 1 “unlock 6.0”. The state of the economy was complex and challenging to make any predictions on recovery with successive sets of lockdowns. IMF revised real GDP growth rate from +7% (Oct 2019) to +2% (Apr 2020) to - 4.5% (June 2020) and finally in October 2020 said Indian economy may shrink by -10.3% for fullyear 2020. The pandemic triggered advertisers to drastically cut ad spend by the end of March and signs of revival began to show up only sometime in July 2020.
The extent of cut backs was severe for industries like Travel & Tourism, Hospitality and Retail, while some product categories in Personal Hygiene & Health, Pharma, Gaming, Home Entertainment and Technology showed resilience or growth. There were also some steep spending increases from product categories that had never run MAGNA ADVERTISING FORECAST - DECEMBER 2020 10/17 any campaigns or had a negligible impact pre-COVID: Hand Sanitizers, Household Cleaners, Payment Banks & Surgical Goods & Equipment.
During the first nine months of the pandemic, access to media, distribution challenges and the fear of virus attack altered the media consumption behavior, leaving behind a softened advertising landscape. Total advertising spends in 2020 will contract by -15.8% from ₹798 billion ($11.3 billion) to ₹672 billion ($9.5 billion). The only bright side of 2020 is that digital media was much more resilient and the only media to show growth, although at a slower pace. When the whole country was cooped in their homes, digital activity substantially increased across sectors including traditional brands. This aided, digital ad sales to grow double digit (+10.3%) led by Social (+17%) and Video (+12%) formats. TV ad sales, the largest media format in 2019 (37% market share), shrank by -14.8%. With this, digital will take a bigger slice of the pie, equating shares with that of television (248 billion rupees – 37% market share for each). Overall, linear ad sales fell by an estimated -26% in 2020.
The return of live sports and broadcast production, as well as the festive season likely helped with ad spend stabilisation in the second half. It is estimated that second half of the year helped the market to recover to about of 80% of 2019 spends. While the degree of recovery varies for each media, OOH will need a longer window to reclaim and return to 2019 revenue levels. In 2021, the advertising market performance will be tied to the pandemic and the business outlook depends on how quickly vaccination can get the outbreak contained. As road maps are being drawn for distributing and administering vaccines, mass immunisation requires unprecedented preparation and timelines are fluid where we stand today.
Assuming the outbreak is indeed under control at some point in the year, and the IMF GDP growth prediction (+8.8%) materialises, MAGNA expects all media formats to return to growth. Linear ad sales will rise +31% and digital +19%, leading to overall growth of +27%, from ₹672 billion ($9.5 billion) to ₹853 billion ($12.1 billion).
|ADVERTISING GROWTH FORECASTS- KEY MARKETS|
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