In the field of outdoor advertising, the industry has reported a monthly increase of between nine and 26 percent since June and is preparing to return to the pre-crisis level.
(Photo: Ströer Group)
Dusseldorf Although the advertising industry in Germany has recovered from the corona low, the pre-crisis level has not yet been reached. The industry will grow by around five percent to 47 billion euros in 2021, predicts the Central Association of the German Advertising Industry (ZAW), as the Handelsblatt has learned in advance.
That is more than in the first year of the crisis in 2020, when advertisers turned over 45 billion euros, but less than in 2019: Before the pandemic, sales were 48 billion euros. The industry is also developing inconsistently: while TV advertising and outdoor advertising are regaining their strength, the newspaper advertising business continues to suffer.
Digital advertising is growing by double digits, but this is primarily in favor of the large American platforms Google, Facebook, Amazon and Apple, which, according to industry estimates, now dominate 80 percent of the digital advertising market.
The advertising industry accounts for around 1.3 percent of German economic output, and the companies employ around 900,000 people in total. The advertising industry in particular suffered severely from the pandemic, sales dropped significantly in 2020 – and for the first time since the financial crisis. Many companies were able to save costs quickly because they cut or even suspended their advertising budgets.
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However, many participants would “see advertising not only as a cost factor, but as a value-adding investment in companies, brands and products,” said ZAW Managing Director Bernd Nauen to the Handelsblatt. With the end of the lockdown and the normalization of life, companies’ advertising budgets rose again, and many investments can also be explained with catch-up effects.
The digital advertising industry is still getting through the crisis comparatively well. The umbrella association expects growth of 23 percent in this area. The ZAW is concerned, however, that the gap between Google and Co. to the other providers is getting bigger and bigger.
For example, the advertising sales of the search engine giant grew by 69 percent in the second quarter alone, while the digital sales of all German newspaper publishers rose by only six percent in the entire first half of the year.
The association therefore calls on the German and European competition authorities to deal more critically with the US platforms than before in order to limit their market power. With a view to the new federal government, ZAW President Andreas Schubert hopes for “finally effective competition regulation for digital markets and a practicable and balanced data policy”.
TV market continues to grow even after the end of the contact restrictions
In the field of outdoor advertising, the industry has reported a monthly increase of between nine and 26 percent since June and is preparing to return to the pre-crisis level. Even in a digital world, posters at airports, subways and city centers could “achieve a quick range and are also easy to control locally,” says Nauen.
The TV market is also growing: The ZAW is assuming a plus of seven percent because many people would still spend a lot of time in front of the TV set even after the contact restrictions had ended. For example, the RTL Group reported an increase in television advertising revenues of almost 16 percent in the third quarter.
Many popular magazines and daily newspapers were already undergoing a profound structural change before the outbreak of the pandemic. The crisis has further exacerbated their problems in the advertising market. In the area of print, the association is assuming a minus of four percent; classic advertising papers in particular would suffer. The radio sector could also see a slight decrease in sales towards the end of the year.
For 2022, the association expects an increase of three percent to 48.4 billion euros, which would put the industry slightly above the pre-crisis level. Market insider Nauen expects negative effects from disrupted supply chains, rising energy prices and inflation. “Persistently rising prices depress the buying mood of consumers and thus also investments by the advertising industry.”
If the increasing number of cases necessitated renewed restrictions on public life, this would hit the industry hard again.
More: The advertising industry expects many bankruptcies – “The value is historically high”