Magna reduces ad sales outlook

Another signal we're in for a very bumpy road

Looking into its annual crystal ball in December, Magna predicted a world where ad sales would jump 5.7 percent globally, and here in the U.S., we were going to see revenue growth of 6.6 percent. 

Today, six months later, we live in a vastly different world, one pockmarked by the coronavirus that’s forced countries to lock down, economies to grind to a halt, and industries to reevaluate if not completely redo their approach to everyday life.

According to AdAge,

Magna is further slashing its ad sales outlook for 2020 in the wake of the coronavirus pandemic. The agency now expects a 4.3 percent decline in U.S. revenue to $213 billion, down from its forecast in March of a 2.8 percent drop in ad revenue this year. On a global basis, Magna now predicts a 7 percent decline in ad sales.

This is a violent swing. Magna also sees no light at the end of the tunnel soon, either, reducing its forecast through 2024 (yes, the impact of the coronavirus is already predicted to play out through the next presidential election) to 3.5 percent growth per year, down from 4.5 percent.

Looking across the landscape, AdAge reports, no legacy medium is immune this year:

• National TV ad revenue: down 13 percent

• Print: down 26 percent

• Radio: down 17 percent

• Out-of-home: down 17.5 percent

However, digital looks to be able weather this maelstrom a bit better:

• Digital ad spend: up 2 percent

• Digital video: up 10 percent

Of course, things can change in a heartbeat. And as BuzzFeed notes, that changing heartbeat will most likely accelerate come August. 

For the last three months, the 40+ million unemployed Americans have been receiving an additional $600-per-week from the government to help cover costs. That runs out on July 31. 

That will coincide with evictions returning after being put on hold for months. This month, about one-third of renters were unable to pay their rent in full or at all, despite all the stimulus money. A federal law that bans evictions in any properties financed by federally backed mortgages — more than a quarter of all households, according to one estimate — expires on July 25, just a week before millions of people’s main economic lifeline is pulled away. Unless they are extended, statewide orders banning all evictions in places that have been hardest hit by the unemployment crisis will also expire around then: Florida’s on July 1, California’s on July 28, and New York’s on Aug. 20.

And according to an Axios report today:

A new survey finds that rather than saving, Americans who switched from working in an office to working from home spent more money last month, as grocery and utility bills increased significantly but spending on things like restaurants, gas and clothes declined only slightly.

So you mix in high unemployment, housing issues about to pop, and economists are not sanguine about the outlook.

Yesterday, the Washington Post put this into perspective: “$6.5 trillion in household wealth vanished during the first three months of this year.”

After a quick initial bounce this year, the economy “will go largely sideways” until a coronavirus vaccine is developed, according to economist Mark Zandi of Moody’s Analytics. Without an additional $1 trillion in federal rescue efforts, the economy later this year will relapse into a double-dip recession, he added.

And don’t hold your breath for a vaccine any time soon. Vaccines are usually a multi-years-long process; vaccines are rarely found in fewer than five years.

The New York Times has a great vaccine tracker, by the way. 

All of this is to say: an advertising outlook on June 15, 2020 will more than likely be revisited and revised throughout the year.

Just last week, for example, Variety reports:

As the coronavirus pandemic forces delays in sports seasons and the production of scripted programming, and creates a severe business downturn, the ANA on Thursday enlisted top executives from companies like Bank of America and Procter & Gamble to push the upfront process to later in the year, “with the typical negotiation window occurring in the fall or early winter timeframe.”

The coronavirus’s impact on upfront negotiations changes the multi-billion-dollar landscape, and today, NBCU’s Linda Yaccarino sent a note to marketers essentially saying, Yes, we need to change the way ads are bought and sold, but there are bigger fish to fry. 

Variety reports on Yaccarino’s note, which is a clarion call to marketers: 

“to a new open marketplace built on trust, radical transparency, and meaningful collaboration. Just imagine how opening up training, technology, and insights across the marketing industry could simultaneously accelerate lasting transformation and real economic recovery.

“Inevitably, this open marketplace will require new alliances, partnerships, business models, and maybe even some strange bedfellows. And none of that should scare us; it should liberate us to do whatever this moment requires.”

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Huey Lewis and the News, “Back in Time”

Some interesting links:

• The Postal Service Is Steadily Getting Worse — Can It Handle a National Mail-In Election? (ProPublica)

• Amazon's working on a less-forgetful Alexa (Protocol)

• Caught in the mushy middle: How Quartz fell to earth (Digiday)

• Someone's made Lee Carvallo's Putting Challenge from The Simpsons (Eurogamer)

• As maskless New Yorkers crowd outside bars, Cuomo threatens to shut the city back down (Washington Post)

• Sephora signs '15 Percent Pledge' to stock more Black-owned brands, but currently carries only seven (Thinknum)