Podcasters are sitting on the right side of the digital-traditional divide as Zenith Media’s latest update on the global advertising market suggests the COVID-19 pandemic has helped to accelerate a push of marketers toward the digital side. Zenith says there has been a “rapid shift” in media budgets from traditional toward digital media, accelerating the trend that was already taking place. Zenith now forecasts that digital will account for a slight majority (51.0%) of global ad spending this year, up from the 49.5% it forecast in December. And it predicts that share will reach 54.6% in 2022.
“Digital ad budgets were cut quickly in the crisis’ first phase, given generally easier to cut without penalty. But as time progressed, brands allocated more budget into digital channels to take advantage of their flexibility and ability to optimize performance, particularly important qualities in an uncertain time,” says Zenith. It forecasts digital ad spending will shrink 2% this year. Zenith does not expect any of this share to return to traditional media as the crisis eases, either.
“The coronavirus forced brands to embrace digital advertising even faster than expected and made digital transformation of businesses more urgent than ever,” said Jonathan Barnard, Zenith’s Head of Forecasting. “This year will be the first in which digital advertising will attract more than half of total global ad spend, a milestone we previously expected in 2021.”
Global advertising spending is forecast to drop 9.1% this year but Zenith says the U.S. has been “relatively resilient” compared to the rest of the world. It credits record political spending in the run-up to the Presidential elections in November for why it predicts U.S. ad spending will decline by just 7% this year.
“Advertisers pulled back spending sharply when the scale of the coronavirus crisis became clear. The steepest declines took place between March and May,” said Zenith. “These declines have now started to ease and are expected to gradually moderate over the rest of the year.” The company is banking on 2021 being better, boosted by the rescheduled Summer Olympics and UEFA Euro 2020 football championship. If those go on as planned, it forecasts a 5.8% recovery in global ad spending next year.
‘Radio Suffered The Least’
Billions of dollars continue to pour into traditional channels and of those, Zenith says radio and television have “suffered the least” in the coronavirus pandemic. It projects global traditional radio revenue will decline 12% this year, with global television forecast to be off by 11%. Compare that to print, which had already been in a years-long decline, a move that has only been accelerated by the pandemic. Zenith projects global newspaper ad spending will shrink by 21% with global magazine ad spending down by 20%. It notes those figures represent just printed publication ad dollars, not their digital advertising dollars.
With movie theaters locked up tight in many countries, Zenith estimates in-cinema ad revenue will drop 51% this year. And while more people are back on the road, it still thinks out-of-home advertising will shrink by 25%.
The outlook for 2021 is even more difficult to discern with a vaccine wildcard to be played. For the moment, Zenith predicts radio will see a “minimal” recovery in ad revenue next year with a growth rate of just 1%. It is the same for TV, which it predicts will grow 2%. No recovery is forecast for newspapers or magazines, says Zenith, while out-of-home and cinema growth will be stronger as they compensate for much greater declines this year.