Global Ad Spending Plunges As Hopes For V-shaped Recovery Fade

As economic paralysis continues, global advertisement spending is set to collapse this year due to the COVID-19 pandemic, according to WARC, an international marketing intelligence firm. 

WARC tracks 96 markets worldwide, expects ad dollars to decline by 8.1% ($49.6 billion) to $563 billion this year. The forecast was initially an expansion of 7.1% for 2020, but those figures were quickly revised for a post-corona world. 

The report said traditional media ” will fare far worse than online,” with ad spending set to plunge $51.4 billion (-16.3%) this year. Much of the declines are seen across cinema (-31.6%), out of home (-21.7%), magazines (-21.5%), newspapers (-19.5%), radio (-16.2%) and TV (-13.8%). The good news, online advertising will see a slight expansion (+.06%). 

Coronavirus lockdowns have wrecked households in both hemispheres. High unemployment plagues nearly every economy, along with plunging cash flows for businesses, who have now been forced to trim expenses and pull back on ad spending. 

One of the hardest-hit areas for estimated ad spending this year is the travel and tourism industry, with an expected decline of 31.2%. Spending will likely remain depressed for several years as consumers avoid airplanes, cruise ships, hotels, casinos, etc., for fears of contracting the virus. 

The slump in advertising has yet to surpass the record decline seen in 2009 when the global ad market contracted by 12.7%. The report notes an election year in the US could cushion ad spending. 

James McDonald, WARC’s head of data content, said: “We note three distinct phases to the current downturn: firstly, an immediate demand-side induced paralysis for sectors such as travel, leisure, and retail, combined with supply-side constraints for CPG brands. Second, the recessionary tailwind will exert extreme pressure on the financial services sector as well as the consumer, whose disposable income is now heavily diminished.”

“Finally, as the world takes tentative steps towards a recovery, there will be an added emphasis on healthcare and wellbeing credentials among brands not normally associated with the field, aside higher spending within the pharmaceutical sector to leverage the shifting consumer mindset,” McDonald said. 

Without an expansion in global ad spending, this all suggests economic activity in every major and emerging economy will remain depressed through this year and into next, thwarting any chance a V-shaped recovery will be seen in the back half of 2020.