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News Analysis 7 Dec 2020 - 3 min read

Who's counting? Magna has ad market back 6%, Zenith calls it 12%; 2021 looks healthier

By Josh McDonnell - Senior Writer

Show us your numbers: 2020 was down, but by how much?

IPG Mediabrands' investment intelligence arm Magna has the Australian ad market back 6.2% in 2020. Publicis-owned Zenith has it back 12%. They both agree that 2021 looks healthier, with digital to drive a recovery of sorts - but it may take another year or two to recover to pre-Covid levels. Meanwhile GroupM is predicting a big 2021 for APAC.

Magna: Market back 6%, digital to drive recovery

Australia’s advertising market declined 6.2% in 2020 to $15.7 billion dollars. GDP shrank by 4.5% due to the Covid-triggered recession, according to analysis by IPG Mediabrands' media research agency, Magna.

Next year, the agency predicts digital advertising will be the only sector to record positive growth during the pandemic – but digital now accounts for more than two thirds of Australian ad budgets, some 68%, one of the highest shares in the world, according to the firm.

In 2020, digital ad spend (search, video, social, banners) remained strong, up 6%, driven by social media (+12%), digital video (+13%), and search (+7%). In the main, brands in Australia prioritised “lower funnel” direct advertising formats that support e-commerce sales.

This was evident for brands such as auto manufacturers Audi and Volkswagen, both of which were forced to create their own e-commerce platforms, as well as shift test drives and vehicle demos into digital channels. Though some of these combined brand and performance aspects to good effect.

According to Audi's marketing boss Nikki Warburton, the brand's virtual tours of its cars, which ran on video on demand (VOD) platforms, registered a 95% viewer completion rate, while online engagement on Audi’s site has increased by double digits since April.

 
Brand advertising recovering

While advertisers raced for short-term sales activations as Covid shuttered businesses, Magna’s report says higher funnel brand advertising campaigns recovered in the second half of the year (as evidenced by the likes of Menulog, Wesfarmers-owned Catch and others launching brand campaigns in H2).

However, the early impact was significant: linear advertising formats recorded a 25% drop in advertising revenues for the full year, with the largest player, TV, seeing ad revenues fall 16%. TV now represents 18% of total ad bugets, per Magna’s report.

Other linear formats suffered sharper declines in 2020. Radio ad sales fell -27%, print declined by -32%, and out-of-home ad sales tumbled by -38%. Cinema advertising took a major hit as lockdowns bit both audiences and production studios. It closed the year -67% according to Magna’s figures.

While Magna predicts digital will again be the winner in 2021, Nick Durrant, General Manager Investment, told Mi3 that the firm is cautiously optimistic for 2021.

"It seems the underlying economic fundamentals are lining up nicely for a consumer-led recovery next year. Lockdowns, tax cuts and job keeper have put money in people’s pockets - and as the future looks brighter with little community transmission and vaccines rolling out, we see people more prepared to spend it.”

 

Zenith: Market down 12%, long road back

Meanwhile, Zenith has also published a 2020 review and 2021 outlook. The Publicis-owned agency is looking at different numbers to Magna: Zenith has 2020 ad spend back -12%.

It’s forecasting growth of 8% in 2021, which means the bounce back will fall short of pre-Covid spend.

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. 

The report predicts BVOD will continue to see "exponential growth", accounting for 10% of TV network revenue by 2022, though nowhere near enough to offset losses linear TV experienced in 2019. 

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

“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," Zenith Australia’s National Head of Investment, Elizabeth Baker says.

"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.”

 

GroupM: Global market back 5.8%, APAC set to boom

WPP media arm GroupM's global view has the worldwide ad market back -5.8% in 2020.

It calculates digital growth of 8.2% across the year, excluding U.S. political activity, a marked slowdown versus the last decade of double digit digital growth.

GroupM said digital pureplays Amazon, Facebook and Google should take 61% of the spoils in 2021, doubling their share since 2015 when it stood at 30.6% (and when Amazon got very little). By 2024, GroupM estimates digital advertising will take 66% share of total ad dollars globally.

Overall, while its report does not break out figures for Australia, GroupM predicts the APAC ad market will grow by 14.1% in 2021.

Locally, GroupM Australia CEO, Mark Lollback said the firm “has a sense of optimism going into 2021” and urged brands to continue to “maximise flexibility around consumer consumption trends in the short term, alongside long-term marketing goals.”

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Josh McDonnell

Senior Writer

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