Dentsu Aegis Network (DAN) has revised its advertising spending forecast for China, and now predicts growth of 3.9%. While the new forecast beats the 3% growth rate observed in 2019, it has been sharply revised down from the 5.6% the network predicted previously.
In fact, DAN's forecasts for most countries around the world have dropped, with Australia and Japan as notable exceptions in APAC (see table below).
Despite this threat, DAN contends that government measures to support economic growth and consumer confidence, as well as the Tokyo 2020 Olympics could provide a positive boost to the second half of the year. However, the network is quick to add a caveat to its forecast.
“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 of Dentsu Aegis Network China. "Marketers in 2020 need to manage contrasting dynamics; long and short term, global and local, digital and traditional.”
While DAN does forecast some growth in China, there is a degree of nuance to its statements. For example, digital and OOH were the only channels to grow in 2019, whilst all other media channels weakened by varying degrees. However, in 2020, OOH faces a difficult year with spend expected to fall by 6%.
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 COVID-19 epidemic. Traditional TV and radio have contracted more sharply than in previous estimations, (down 8.1% and 12.7%, respectively).
Instead, in China, mobile continues to be the growth driver, and China digital spend and is expected to increase by 17.6% in 2020, accounting for 77.5% of total digital advertising spend. This will continue to grow with diverse formats and the expansion of 5G.
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.
The months-long COVID-19 pandemic that China faced—and continues to battle—has also influenced growth in some markets. For instance, Ecommerce is forecast to capture a 42.4% share of all digital spend in 2020 and will be boosted as consumers moved online to make essential purchases. Other categories such as short video, mobile gaming, news and online video are the top four app categories during this period, and advertisers are adjusting spends accordingly.
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