US AD MARKET REMAINS STRONG BUT REST OF THE WORLD SLOWS DOWN
- US Media Owners’ Total Advertising Revenues Grew by a Stronger-than-Expected +5.1% in 2019 to $224 billion (excluding cyclical: +7.2%).
- Linear Ad Sales Declined by -6% This Year While Digital Ad Sales Continued to Grow Double Digits (+16%).
- MAGNA expects More Growth in the US in 2020 as Ongoing Digital Growth and Record Political Spending Will Mitigate the Impact of Economic Slowdown: Total Growth +6.6% (excluding cyclical: +4.4%).
- Advertising Slows Down in the Rest of the World, Due to Economic Slowdown and Political Instability in Latam and EMEA.
- Global Ad Market Grew by +5.2% in 2019, and will Grow Again by +5.7% in 2020 (excluding cyclical: +4.6%).
GLOBAL MARKET PLACE
1. Media owners’ advertising revenues grew by an estimated +5.2% this year, to $595 billion globally. This is in line with MAGNA’s previous forecasts for global full-year growth (June 2019: +5.0%).
2. Digital advertising sales (search, video, social, display) continued to grow by double digits, although it is maturing, as predicted by MAGNA: +15% this year globally. It’s a noticeable slowdown compared to +18% to +20% growth rates of the last four years. Digital ad sales will represent more than half of global ad sales for the first time this year: 51.5% ($306bn).
3. Social media continues to be the fastest-growing digital format (+25% down from +34% in 2018) ahead of digital video (+23% down from 30%), and search (+14% down from +19%) while static display formats generate stagnating revenues. All digital ad formats are slowing down due to the maturity of digital media consumption and digital marketing in most markets.
4. Search remains the #1 digital format with 47% of total digital ad revenues ($144 billion) as brands re-allocate parts of their trade marketing budgets from brick-and-mortar retail to product search on ecommerce platforms.
5. Traditional linear ad sales (linear TV, print, linear radio, OOH) decreased by -3.4% to $289 billion, representing less than half of total ad sales for the first time (48.5%).
6. Global linear television ad revenues shrank by -4% this year, the poorest performance since 2009, as pricing increases can no longer offset the accelerated decline of linear audiences, especially in an odd-numbered year without cyclical events/drivers. Print ad sales declined by -10%, in line with previous years, while radio advertising revenues were stable. Out-of-home advertising was the only traditional media to show significant growth (+6%), driven by digital OOH revenues (+20%).
7. Ad spend grew in 62 of the 70 countries analyzed by MAGNA, including all the top markets this year: US +5%, China +9%, Russia +7%, India +13%, UK +7%, Germany +2%. Among the markets that did not grow in 2019, several Asia and Latam countries where the economy suffers from ripple effects of the US/China trade war and/or domestic unrest (Peru, Chile, Malaysia, Vietnam, Lebanon).
8. APAC market grew the most in 2019 (+6.3%) ahead of North America (+5.1%) and EMEA (+4.3%). Latam grew much below expectations (+4.1%) due to economic crises, political uncertainty, and government spending cuts (Mexico).
9. Global advertising spend has now been growing for ten consecutive years (2010-2019) and MAGNA forecasts more growth in 2020: total +5.7%, linear -0.7%, digital +11.7%. North America will grow by +6.5%, APAC by 5.9%, EMEA by 4.1% and LATAM by +6.1%
10. The return of cyclical events (US Elections, Summer Olympics, Europe’s Football Championship) will mitigate the impact of the global economic slowdown. MAGNA estimates that cyclical events will generate more than seven billion dollars of extra ad spend globally in 2020 i.e. a 1.1% uplift. Excluding the impact of cyclical events, the normalized global market growth would be +4.6% in 2020 instead of +5.7%, down from +6.3% in 2019 and +6.8% in 2018.