E-commerce and AVOD driving global ad recovery, says Zenith
The global advertising market is recovering more rapidly than expected, due to e-commerce, retailer media and connected TV ads, according to a revised forecast from Zenith.
The Publicis Groupe-owned agency has today, issued an adjusted prediction that global ad-spend will shrink by 7.5% to US$587 billion this year, as opposed to the 9.1% decline originally forecast in July.
Zenith believes that the global pivot to e-commerce will drive 1.4% growth in digital ad-spend for 2020 and increase its share of total ad-spend to 52%, up from 48% in 2019.
The growth of e-commerce is not expected to reverse once the world begins to vaccinate against the coronavirus pandemic either.
According to Zenith’s Advertising Expenditure Forecasts report, brands have proved the value of digital transformation under stress and they’re likely to press ahead with it enthusiastically, devoting even more of their budgets to digital advertising.
The report forecasts that digital advertising will account for 58% of global ad-spend by 2023.
Meanwhile, the global spike in e-commerce has further fuelled rapid growth in demand for retailer media – display or search ads that appear on retailer platforms and direct users to products available for purchase.
Amazon is the main supplier of retailer media outside China, and its revenues grew by more than 40% year-on-year every quarter in 2020.
Zenith estimates advertisers spent US$35 billion on retailer media in 2019, and will spend US$51 billion in 2020, up 46% year on year.
In addition, ad-funded video on demand (AVOD) is also fuelling the recovery, particularly on connected TV sets. Zenith predicts it will help drive 8.4% annual growth in online video advertising between now and 2023.
Between January and April 2020, the reach of SVOD services on connected TVs in the U.S rose by 5%, but the reach of AVOD services rose by 9% to 58.5 million households, or 48% of the total, according to comScore.
“Now that it offers mass reach in key markets, it’s the right time for brands to invest in connected TV,” said Christian Lee, global managing director at Zenith. “Brands should use connected TV for both branding and performance, exploiting its high ad recall and full targeting and tracking capabilities to drive awareness and sales conversions at the same time.”
David Mulrenan, head of investment at Zenith concluded: “The UK picture is not that different from the rest of the world. 2020 is definitely picking up pace as we close in towards Christmas, with year-on-year growth expected in the TV market for Q4. This sets up an intriguing 2021 as the economy and ad market start to recover. Cinema and OOH will return strongly and digital will continue on its strong growth journey due to the gains made this year in e-commerce.”