COVID-19 is not a doomsday scenario for adland, according to MAGNA study

While the coronavirus will leave the advertising industry with a bloody nose, it is not expected to deliver a knockout punch.

COVID-19 is not a doomsday scenario for adland, according to MAGNA study

The advertising industry is in for some rocky times, but digital advertising may help soften the blow, according to data from MAGNA, a centralized investment, innovation and intelligence division of IPG Mediabrands.

In MAGNA’s U.S. Ad Spend Forecast March 2020 update, the organization notes that it expects to see a total market decline of roughly $6.2 billion from 2019, compared with a whopping decline of $33 billion experienced in 2008-2009.

The report cites digital advertising as the main resource softening the economic impact of COVID-19 on the advertising industry as a whole.

Digital media ad sales are projected to grow by +4 percent this year and re-accelerate to +7 percent next year. Search will slow down to +4.5 percent while social and digital video will continue to grow by high-single digits.

But the impact is still there, and may very well be worse than MAGNA’s forecast, depending on how COVID-19 develops.

Overall, media suppliers’ total linear ad sales are expected to decline by -12 percent (-20 percent in the first half, -2.5 percent in the second half) while digital ad sales will be more resilient at +4 percent (-2 percent in the first half, +10 percent in the second half). 

The impact of COVID-19 is expected to be severe for the travel, restaurant, and theatrical movie industries; significant for retail, finance and automotive; moderate for packaged food, drinks, personal care, insurance and pharma, and potentially positive for e-commerce and home entertainment.

Media vendors’ linear ad sales will be hit the hardest, and are expected to shrink by -12 percent, this year compared to approx. -4 percent per year in recent years.

This decline also takes political advertising into account.

The decrease in advertising sales will reach -13 percent for national TV, -12 percent for OOH, -25 percent for print and -14 percent for radio.

The outlook is forecast to be more positive for broadcasters and publishers when including digital ad sales. Local TV’s non-political ad sales will also decline massively but political spending (almost $5 billion, +26 percent vs 2016) will stabilize full-year revenues.

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