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Friday, March 29, 2024
CEOWORLD magazine - Latest - CEO Advisory - Advertising Market: Agencies Are Rather Pessimistic About Business In 2020

CEO Advisory

Advertising Market: Agencies Are Rather Pessimistic About Business In 2020

The Ad World Masters agency presented a new survey about the advertising market globally and how is affected by the coronavirus pandemic. The Ad World Masters surveyed over 200 agency owners and top managers from 55 countries to evaluate their expectations and understand the condition of creative firms all around the globe.

According to the survey, 57% of agencies expect their annual income to be lower in 2020 than in 2019. Though, an equivalent fraction (53%) believe they will get back on track after a few months. Furthermore, 27% of the agencies foresee an increase in their business this year despite the coronavirus pandemic.

More than 40% of the agencies – mainly the larger ones- is estimated that will go bankrupt in 2020, while the smaller ones will gain from the situation.  Also, 16,3% of respondents at the survey predict no change in income for their agency in 2020 compared with 2019. Some optimists expect an increase. 20% of the respondents expect an increase of about 9,4%, while 10% of the respondents expect an increase of about 6,9%.

The agencies that participated in the survey are middle-sized from North America, Europe, and Asia.

Although agencies are rather pessimistic about business in 2020 they do not plan to reduce their team size. More specifically, 47,8% of the agencies are not planning to do so in 2020 while 11,4% said that it is very unlikely to happen. Only 4% of the agencies are planning a reduction, while 12,4% said that it is possible. The agencies considering a reduction mostly specify cuts to sectors like administration (25,4%), client services (17,2%), management (14,9%), and art direction (14,2%).

Another problem agencies can face is a drop in prices for agency services. 35,1% of agencies think prices for agency services will decrease in 2020-2021, whereas only 12,9% expect an increase. Agencies presume that the pandemic will temporarily affect the agency market, and 53% of survey participants said that after a few months, most things will get back on track.

Moreover, 33,7% of respondents are afraid that brands will continue building in-house marketing competencies in 2020-2021. The 28,2% think brands will use more freelancers than before in 2020-2021 while 35,6% of creative company leaders feel in-house marketing is decreasing budgets. This clearly illustrates the difficult situation for agencies, as clients growing in-house marketing teams and using freelancers will reduce the number of agency projects.

Agencies are looking for solutions that will help them adapt to the changing market. 25,2% of the respondents assume the agency market will be much more product-oriented, meaning organizing and selling agency services as products. This does not yet reflect the market reality but suggests a potential new trend. The 34,7% of the survey participants predict that the biggest market players like Google, Facebook, Amazon, Microsoft, and their advertising systems, will gain in 2020-2021. Only 10,4% think the opposite.

Agencies believe in the dynamism of the current advertising system. 25,7% of the respondents think the market is developing fast and creating many new solutions to reach target groups efficiently.

Participating agencies deliver a broad range of services, either digital or offline. The most popular services were concept/strategy, graphic design, social media marketing, web development, copywriting, content marketing, digital media – each of these services collected over 50% of votes. The average agency business perspective in 2020 in the United States is -6%, in the United Kingdom -8% and in India 2%.
The most optimistic agencies are from Argentina, Latvia, South Africa, Iran, Egypt, Australia, Uganda, Indonesia. They have higher growth expectations.

The most pessimistic agencies are from the United Arab Emirates, Israel, Jordan, Panama, Germany, Nepal, Romania, Japan, Kuwait, and Vietnam. Leaders from those countries expect a decrease in business with a drop as high as -50% in 2020. Generally speaking, the level of pessimism among European agencies is rather high.


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CEOWORLD magazine - Latest - CEO Advisory - Advertising Market: Agencies Are Rather Pessimistic About Business In 2020
Maria Gourtsilidou
Maria Gourtsilidou is Senior Editor of Research and Data Analytics at the CEOWORLD magazine. She is responsible for driving thought leadership, using data analytics to showcase the company’s products and services, and fostering knowledge sharing between CEOWORLD magazine and client organizations. She studied Public Administration (Economics Of The Public Sector) in Greece and holds a Bachelor’s in Public Administration from the Panteion University of Political & Social Studies. Follow Maria Gourtsilidou on Twitter. Write at maria-gourtsilidou@ceoworld.biz.