Global green shoots: Where the media and advertising markets are around the world on the road to recovery

U.K.: Little England or Great Britain? 

The end is in sight for the U.K. Vaccinations across the country are ticking along and the prospect of fewer coronavirus restrictions is lifting consumer confidence. 

In anticipation, marketers, it would seem, have been carefully loosening the pursestrings since the turn of the year. In the three months to March, just over one in 10 marketers reported cuts to total marketing spend, marking a notable improvement on the final months of 2020 when a quarter of them admitted to tightening their belts, per the Institute of Practitioners in Advertising. 

“It is a vital time to be running your activity based on analyzing behavioral biases, understanding exactly what encourages clicks, so that you are in line with the ever changing consumer preferences that has transformed more than ever before,” said John Barham, managing director at digital agency Roast

But for all the unfettered optimism over the pandemic recovery, it’s an outlook laced with caution. Thanks to Brexit, the U.K. is no longer the bridge to Europe. In turn, the pattern of imports and exports, once dominated by Western Europe, will shift. And that means marketers and the companies they pay will have to change attitudes and financial models so that they can tap into opportunities elsewhere in places in North and South America, the Middle East and Africa as well as across the Asia Pacific. — Seb Joseph

Spain and France: Light at the end of the tunnel

It’s been a rough start to the year for Spain. Even as fears of a fourth coronavirus wave settle, efforts to vaccinate the country are marred by delays and concerns over rare side effects. Understandably advertisers are wary. 

“There was an 18% drop in ad spend in the first three months of the year where all media suffered except for digital,” said Ariane Längsfeld, head of knowledge at MediaCom Spain. 

Still, there are some early green shoots of recovery. 

The consumer confidence index (ICC), released at the end of April by the Sociological Research Center (CIS), rose 77.8 points, compared to 73 points the previous month, but still below February 2020 (85.7 points). Of the two sub-indices that make up the ICC, the current situation index went from 43.4 to 48.1 points, while the expectations index rose from 102.7 to 107.4 points. Despite not having recovered the level of confidence prior to the pandemic, these are the highest scores in the last year.

Like its nearest neighbor, France is coming to the end of its latest lockdown. By mid-June, restrictions should be eased, said Sandrine Reinert, the managing director for digital agency JellyFish’s French business. Unlike Spain, however, France’s ad recovery has been on a u-shaped one in so far as it’s been in slow decline, remained at the bottom for a protracted period of time before moving higher again. 

“Recovery has been slower than expected,” said Thomas Jamet, CEO Mediabrands and UM France. “Based on our forecasts it looks like the first and second quarters will be questionable in terms of growth, while the latter two quarters will be excellent thanks to the level of money people have been able to preserve through lockdowns.”

Little wonder then why some agencies are already thinking about what the workplace of the future will look like. For the remainder of the year, employees JellyFish France, for instance, will be able to work from the office whenever they choose to. 

“From there, however, we will have a hybrid model of 60% (three days) in the office and 40% (two days) at home,” said Reinert. — Seb Joseph

Sweden: Ever the exception

Lockdown really never existed for Sweden as the country’s government avoided mandating it. Nevertheless, marketers are understandably worried about the future. Look no further than how they buy media. Between this year and next, spending is projected to be flat, but from then it gradually dips, going from growth at 3.5 in 2023 to 3.0% in 2025, per eMarketer.  

“People are dreaming about starting to travel again and summer is coming up, which is important for a cold country like Sweden,” said Emma Eriksson a former art director at the advertising agency Forsman & Bodenfors in Sweden. She was recently promoted to co-head of creative for the agency’s New York arm. — Kimeko McCoy

U.S.: Red hot recovery 

Whatever way you look at it, all signs point to a good recovery in the U.S. GroupM expects the ad market to grow by 15% this year compared to 2020. Revenues from advertising are expected to rise 6.4% to $240 billion over the same period, per Magna Global, an ad-buying arm of Interpublic Group of Cos. Naturally, digital is driving this growth. In fact, digital will capture two thirds, or 67%, of total advertising revenue, according to Magna Global. 

There could, however, be a sting in the tail — inflation. Consumer prices jumped 4.2% in the 12 months through to April, up from 2.6% in March and making it the biggest increase since September 2008. 

Marketers will need to earn those immient price increases by buidling stronger brands, as Kellogg’s CEO Steven Cahillane told financial analysts recently: “We have to earn that price in the marketplace through investing in our brands, through innovating, through putting the types of performances that we’ve been able to put against our brands, which puts us in a good position to have the confidence to slightly raise our guidance even despite increased cost pressures that are quite real.” — Seb Joseph

China: ‘Healthy’

China’s ad market is “healthy,” said Brian Wieser, global president of business intelligence at media agency GroupM.

While the company expects reduced growth rates in other large markets in 2021, China is poised to grow 6.2%. Agency giant Dentsu said ad spend growth in the coming year for China will hit 5.3%, up from 1.6% in 2020. Spending in digital — particularly social media, e-commerce and video — leads the way. Emarketer predicts digital ad spending in China to continue double-digit growth, hitting 17.5% in 2021, with digital ad spending reaching the equivalent of around $105.58 billion. 

Overall the country experienced a surge in consumer activity after major pandemic lockdowns lifted in the second half of 2020. “In China, we call it revenge spend,” said Tom Simpson, svp for the APAC region at mobile ad firm AdColony. Consumers “came out hard,” and advertisers followed by spending in channels such as digital and mobile advertising to meet them.

A trend to watch: the rise in video content and livestream content creation amid a proliferation of 5G connectivity and a desire for brands to generate more consumer data through engagement with branded entertainment. 

“More and more brands are striking up deals [and] working with a variety of content creators to produce content on their behalf which speaks the language of consumers better,” said Michael Zhang, president of dentsu X China. “They are building out more and more ways to entertain, interact and ultimately convert consumers in their own ecosystems.” — Kate Kaye

Japan: Recovery in reverse

For Japan, this summer’s Olympic Games cannot come soon enough. On the other hand — in an ironic twist befitting the pandemic’s impact on Japan — the Tokyo Olympics’ July 23 kick-off may also come too soon. 

Compared to other countries like China, Italy and the U.S., Japan was able to weather the worst of the pandemic early on. By May 2020, the country had suffered fewer than 800 coronavirus-related deaths. However, the pandemic had taken a toll on the country’s economy, which officially slumped into a recession. After the Summer Olympics were postponed in March, consumer sentiment sunk.

A year later, Japan’s economy appears to be on the road to recovery. The country’s economy still shrank by 4.8% over the course of 2020, after its gross domestic product plummeted by nearly 30% from the first to second quarter. But Japan recorded double-digit month-over-month increases in the third and fourth quarters. 

While Japan’s economy seems to be on the way up, so are its coronavirus case numbers. That surge is threatening the economic recovery and shaking consumer sentiment to the point that Japan had the least optimistic population of 11 countries surveyed in February by McKinsey about their country’s economic recovery prospects, with only 12% of Japanese respondents saying they believe the country’s economy would rebound in the next two to three months.

As of May 11, more than 11,000 people in Japan had died from coronavirus. On May 7, the country had extended a state of emergency for Tokyo and three other areas until the end of the month. By the same day that the extension was announced, more than 230,000 people had signed an online petition calling for the Olympics to be canceled. As recently as May 12, the International Olympic Committee has continued to say that the Summer Games will take place as planned. But on that same day, Olympics sponsor Toyota said the brand was “conflicted” over the event being held given people’s concerns. — Tim Peterson

Australia: set for a rapid recovery

Closed borders, hotel quarantines, contact tracing, and “snap” lockdowns have helped limit the spread of Covid-19, and Australia largely has its coronavirus cases under control, with just 910 deaths total, according to data from the New York Times. (The U.S. has recorded almost 574,000 deaths.) As such, Australia’s media market started to come back in the fourth quarter last year.

“The recovery has continued into 2021,” Antony Ellis, managing director of Publicis Media Exchange said via email. “We have a cautious but optimistic outlook, and we expect the volume of media agency bookings to grow significantly.”

Digital and television ad spend have rebounded the quickest and remain strong, with television taking 41% of national ad spend in Australia and New Zealand as of December 2020, according to the Standard Media Index. 

“Metro TV in particular and digital are our two strongest channels,” said Mark Henning, executive director of media, digital, and creative at Kantar Australia. “Video in general was also a big winner throughout the pandemic, and looks to be continuing.” Out-of-home advertising remains down 23% according to Publicis data.

The Westpac-Melbourne Institute’s Consumer Sentiment Index surged 57%, from 75.6 in April of last year to 118.8 in April 2021, thanks to low cases, positive news around the labor market and easing COVID-19 restrictions. 
That optimism, paired with new consumer preferences, could be a sweet spot for advertisers. More than half of Australians have adopted new shopping behaviors, and 30% have tried a new brand in the pandemic, according to research by McKinsey. Australians also reported they intend to continue or increase their use of digital experiences. For example, grocery delivery usage increased 25%, with 50% of new users saying that they’ll keep using the service. — Erika Wheless

Brazil: Not out of the woods yet

COVID-19 has been responsible for one out of every three deaths in Brazil this year, according to Brazil’s National Civil Registry; less than 10% of the population is fully vaccinated, and the country continues to face supply challenges.

That dark stretch has been bad for Brazil’s economy on the whole, and the media and entertainment sectors in particular are still hurting. An analysis conducted by PwC found that media and entertainment contracted 6.5% in 2020 — the sector contracted 3% in 2009 — and recovery could take a while too. PwC expects that media and entertainment will not get back to their pre-pandemic size until 2022. 

While pockets of the media space fared better — Ricardo Queiroz, a partner in TMT at PwC Brazil, pointed to streaming and OTT service growth as a bright spot — advertising, in particular, fared quite badly. Ad spending in 2020 shrank 15% compared to 2019, according to ZenithOptimedia, and growth the next few years is expected to be modest, between 6% and 8% the next few years. 

Observers searching for reasons for optimism should look to e-commerce, which grew 75% in 2020, driven not just by regular shoppers, but by new consumers and businesses getting into the mix. Nearly 10% of the population bought something online for the first time last year, and more than 150,000 businesses in Brazil began selling things online for the first time. 

If and how Brazil manages to dig out of the spot it’s in may hinge on the government’s appetite for spending to spur growth, not just among domestic players but from foreign investors. — Max Willens.