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The impact of Covid-19 on ad investment: “We’ll feel this for a generation”

June 3, 2020 | By Michelle Manafy, Editorial Director – DCN @michellemanafy

A new report from WARC predicts that the value of global advertising trade will decline by 8.1% – or $49.6bn – this year, to a total of $562.9bn. This comes only months after a pre-outbreak forecast of 7.1% growth, which it made in late January. As such, the absolute downgrade equates to $96.4bn. WARC’s latest Global Ad Trends report focuses on the impact of COVID-19 on global ad investment. It summarizes the latest ad spend projections by market, media and product vertical from WARC Data, and provides insights and commentary from industry experts.

Ad budgets have seen the sharpest cuts in 8 years.

Key findings

Key findings from the report, Global Ad Trends —Adspend 2020/21 — COVID-19 and ad investment:

1. This year’s downturn will be softer than in 2009, when the ad market fell by 12.7% ($60.5bn). This is for a number of reasons, including the U.S. presidential elections, stronger-than expected first quarter results, and a more established online sector – particularly within e-commerce.

2. Almost all product sectors will record a decline in ad investment this year. The most severe falls will be recorded among travel & tourism (-31.2%), leisure & entertainment (-28.7%), financial services (-18.2%), retail (-15.2%) and automotive (-11.4%).

3. Traditional media will fare far worse than online. Investment is set to fall by 16.3% – $51.4bn – this year, with declines recorded across cinema (-31.6%), OOH (-21.7%), print (-20.1%), radio (-16.2%) and TV (-13.8%).

4. Internet advertising is set to record mild growth this year (+0.6%) at a global level. However, a number of key markets will witness a fall. Social media (+9.8%), online video (+5.0%) and search (+0.9%) are all still expected to grow, though online classified – particularly recruitment – is set to fall (-10.3%).

5. A recovery is forecast for 2021, at +4.9%. This will still leave the value of global ad trade $21.9bn lower than its 2019 peak. Ad investment would need to rise 3.7% in 2022 to fully complete the recovery

WARC notes that any brands are currently assessing what the world will look like as lockdowns are lifted and consumers tentatively return to a “new normal.” They predict that, while advertising will recover from this shock (with global growth of 4.9% next year), it is certain that we will feel the economic impact of Covid-19 on the global economy for a generation.

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