According to a newly-updated report from Dentsu, ad spend growth for China in 2020 is forecast at 3.9%, which is up from 3% actual growth in 2019.
This expected increase factors in the impact of coronavirus epidemic which Dentsu said will pull down Q1 activity, “but government measures to support economic growth and consumer confidence, as well as the Tokyo 2020 Olympics will provide a positive boost to the second half of the year,” said Dentsu.
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They did, however, note that the continued global impact of COVID-19, especially on events, makes the forecasts for 2020 subject to change and estimations.
“Forecasting the impact of the coronavirus outbreak into the rest of 2020 remains fluid but we are confident in the continued resilience of Chinese consumers and business,” said Michelle Lau, CEO, Dentsu Aegis Network China.
Some of the changes will continue even after the epidemic, noted the forecast, with Ecommerce expected to capture a 42.4% share of all digital spend in 2020, boosted my consumers moving online to make essential purchases.
The report notes that online video enjoyed growth during the COVID-19 quarantine period driving inventory and increasing paid subscriptions.
According to QuestMobile, short video, mobile gaming, news, and online video are the top four app categories during this period and advertisers are adjusting spends accordingly.
The Japa-based Dentsu, which is a major player in the upcoming Olympic Games this summer added that the “Tokyo Olympics and Paralympics will be a significant driver of increased ad spend in China and around the world as advertisers look to capitalize on huge audiences.” For now, the games are still on as planned according to an optimistic announcement from Japanese Prime Minister Shinzo Abe over the weekend. This despite US President Donald Trump suggesting that the games be postponed for a year.
Breakdown of Ad Spend
The underlying trends from 2019, “paint a nuanced picture for advertising investment,” said Dentus, with traditional TV and Radio contracting more sharply than in previous estimations, (-8.1% and -12.7% respectively)
Digital and OOH were the only channels in growth in 2019, while all other media channels weakened by varying degrees, said Dentsu. OOH “faces a difficult year with -6% growth coming after a disappointing 2019”, while growth in 2019 contracted to 0.6% and 2020 performance “will be impacted by the heavy loss of activity in Q1, as advertising changed formats in response to the controls imposed on outdoor activity due to the coronavirus epidemic.”
Online video remains an important format for digital advertising with a 10.3% share of total digital spend. However, growth is limited by inventory issues and a shrinking commercial audience size as viewers opt for VIP paid memberships and opt-out from watching long pre-roll ad formats. The report additionally noted that online video enjoyed growth during the COVID-19 quarantine period driving inventory and increasing paid subscriptions.
Mobile continues to be a major driver for China Digital spend and is expected to increase by 17.6% in 2020 and accounting for 77.5% of total digital advertising spend. This will continue to grow with diverse formats and the expansion of 5G.
Dentsu said: “As China’s programmatic advertising market matures, more media platforms have accepted programmatic buying. With more ad formats served programmatically and increased premium positions available, advertisers have embraced this expanded choice. This is reflected in the growth rate of Programmatic which is estimated to be 45.7% in 2020.”
Global Forecast
Globally, Digital will continue to drive ad spend growth in 2020 and is forecast to grow 10.5%, reaching US$276 billion with a 45.7% share of global spend. Growth remains strong into 2021 putting digital’s share of ad spend at nearly 50% at the start of the new decade, said Dentsu. Within digital, mobile and video are fuelling growth. Both are forecast double-digit growth in 2020 at 16.5% and 14.6% respectively.
Growth in global advertising spend 2019-21f
Digital is “breathing new life into traditional formats”, the report notes, with television and radio showing signs of recovery with a return to growth in 2020.
TV is predicted to maintain around one-third (31.5%) of global ad spend share, growing at 0.6% this year. Radio too is forecast to grow at 1.7%. Voice assistants, addressable TV, and programmatic ads are driving spending in these more traditional mediums.
Share of global ad spend by media, 2019-21
In its latest forecast, eMarketer downgraded China’s 2020 ad spending growth rate to 8.4% from 10.5% due to a reduction in spending across all media formats, including digital.
