Global advertising faces a cut of USD 63-billion due to Covid: Warc report
The report adds that this number is twice that of 2009's 'The Great Recession'.
04 Dec 2020 | 664 Views | By PrintWeek Team
Warc has released its report on global advertising spends for the year 2020. It states that global advertising spend is on course to fall by 10.2% or USD 63.4 billion to come down to USD 557.3 billion this year.
This is led by sharp cuts following the Covid-19 pandemic across the automobile, retail, travel and tourism sector.
The projections are based on data from 100 markets worldwide, and represent a downgrade of 2.1% points compared to Warc's previous global forecast of adspends to reduce by 8.1% made in May.
In absolute terms, this is worse than the last recession in 2009, when the ad market contracted by USD 61.3bn (-12.9%). Further, after accounting for inflation, the real ad market decline is double the rate of the 'Great Recession', according to Warc.
The report adds that it will take at least two years for the global ad market to fully recover, with a forecast of 6.7% rise in 2021 only enough to recover 59% of 2020's losses. The advertising market would need to grow by 4.4% in 2022 to match 2019's peak of USD 620.6bn.
Traditional media suffers the most
Warc's report states that traditional media has had a torrid year, accounting for the near-entirety of the advertising market decline in 2020. Globally, spend is down by a fifth (-19.7%), or USD 62.4bn, to a total of USD 253.9bn, with linear TV (-16.1%, down USD 29.9bn) seeing the largest absolute cut to ad budgets.
Cinema (-46.5%, down USD 1.5bn), out of home (-27.3%, -USD 11.3bn), newspapers (-25.5%, -USD 9.8bn), magazines (-25.4%, -USD 4.0bn) and radio (-18.4%, - USD5.9bn), along with TV, all recorded their worst performance in 40 years according to Warc.
Most are expected to see growth in 2021, though this is more a reflection of a poor 2020 than a steady recovery.
The online advertising market - 54.4% of this year's total - is flat (-0.3%) at USD 303.3bn, but this is the first year growth had not been recorded since the Dotcom crash in 2000.
Category wise reductions
Automotive: Adspend within the automotive sector is down by a fifth (21.2%), or USD 11.0bn, to USD 41bn this year, meaning the sector is responsible for almost one in five (17.4%) lost dollars.
Travel and tourism: The travel and tourism sector was acutely impacted by the global pandemic and this has resulted in adspend falling by more than a third (-33.8%, or USD 8.4bn) to USD 16.4bn this year. In a sign of the times, the government and non-profit sector was the only to increase adspend in 2020.
All product categories are set to increase advertising investment next year, with travel & tourism (+19.5%) leading growth, though only three sectors - telecoms & utilities (+10.6%), media & publishing (+8.4%) and business and industrial (+5.3%) - will top their 2019 total.
James McDonald, head - data content, Warc, and author of the research, said, "2020 was the most hostile year for the advertising economy ever seen in our 40 years of market monitoring. Some platforms - such as e-commerce and social properties - have emerged from this year relatively unscathed, but the vast majority of the media landscape has witnessed a severe material impact."
He added, "An immediate bounce back is not on the horizon; while growth is expected in most corners of the industry next year, this will be more reflective of a tumultuous 2020 than a sterling 2021. Rising unemployment is set to depress consumption demand well into next year, and though the prospect of a vaccination programme offers cause for optimism among consumers and businesses, it may only be a waypoint in a recovery that stretches two years."
Source: Campaign India