According to Zenith's 'Advertising Expenditure Forecasts' the global ad market has recovered faster than expected from the slump in Q2 caused by the Covid-19 pandemic.
It is now forecast to shrink by 7.5% to US$587bn across 2020 as a whole, 1.6% better off than the agency's forecast of a 9.1% decline in July.
The agency predicts that global ad spend 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, spending will remain below the US$634bn spent in 2019. In 2022, ad spend will grow by 5.2% to reach US$652bn, exceeding 2019 by US$18bn.
The 2022 number is about US$70bn lower than it would have been if it had remained on its pre-pandemic track.
The forecasts are on the back of the assumption 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.
Zenith predicts that global digital ad spend will rise by 1.4% in 2020, and increase its share of total ad spend to 52%, up from 48% in 2019. Euromonitor International forecasts that e-commerce sales will increase by 25% this year, while in-store sales drop by 5%. Brands have increased their spending on digital media with search and social media spends up by 8% and 14% respectively.
The growth of e-commerce is not expected to reverse as the world recovers from the coronavirus pandemic. Zenith forecasts that digital advertising will account for 58% of global ad spend by 2023.
Asia Pacific and Central and Eastern Europe to lead recovery
Ad spend is forecast to bounce back to 2019 levels in 2021 in both Asia Pacific and Central and Eastern Europe. The successful containment of COVID-19 infections in many Asia Pacific markets has limited the economic damage and prepared the region for rapid recovery in 2021. Zenith forecasts ad spend in both regions to shrink by 6% in 2020 and grow by 7% in 2021.
North America has fared better than any other region this year and is forecast to shrink by just 5.3% in 2020, partly owing to very heavy political spending in the run-up to the US Presidential election. The absence of political ad spend will make the comparison look tougher for 2021, when Zenith forecasts just 3.3% growth. Ad spend will then grow by 4.5% in 2022, which is when North America will return to pre-pandemic levels of spending.
Western Europe, Latin America and the Middle East & North Africa (MENA) are all forecast to shrink by 12.3%, 13.8% and 20% respectively this year. Of these, Zenith expects the quickest recovery from Latin America, which will overtake 2019 spending levels in 2022. Mature Western Europe will not return to 2019 levels of spending until 2023.
MENA has been shrinking for years as a result of conflict, political instability and volatile oil prices, which the pandemic has only added to. Zenith forecasts that ad spend in MENA will still be 4.1% lower in 2023 than it was in 2019.
Jonathan Barnard, head of forecasting, Zenith, said, "The global ad market has been recovering from its Q2 nadir throughout the rest of this year. The prospect of multiple effective vaccines gives us confidence that ad spend growth will continue in 2021 and beyond, returning the market to 2019 levels in 2022.”