Global advertising spend is on course to fall by 10.2 per cent to $557.3bn this year, with the COVID-19 pandemic wiping out $63.4bn in industry spend.
The latest projections from WARC, based on data from 100 markets around the world, are a downgrade on the marketing intelligence service’s previous forecast of an 8.1 per cent decline back in May. And, if you are to exclude the $4.9bn spent on the US presidential election, that contraction increases to 11 per cent – or $68bn.
Despite the industry struggling overall, the online advertising market has come through the pandemic relatively unscathed. The market has been responsible for 54.4 per cent of this year’s total spend and only fell 0.3 per cent to $303.3bn. Although, it is the first year that growth hasn’t been recorded since 2000.
Online video is the only ad format within the wider online advertising market to have its prospects upgraded in WARC’s latest forecast, with ad spend set to rise by 7.9 per cent to $52.7bn and then grow by a further 12.8 per cent in 2021. But social formats were the strongest performers in 2020, growing 9.3 per cent to $98.3bn. Social media is expected to match online video’s growth in 2021.
The fortunes for traditional media have been far bleaker, accounting for almost all of the advertising market decline in 2020. Spend has fallen 19.7 per cent – or $62.4bn – to a total of $253.9bn.
Linear TV saw the largest absolute budget cut, slipping $29.9bn (-16.1 per cent), but cinema’s loss of $1.5bn represented a big 46.5 per cent decline. Elsewhere, out of home was down $11.3bn (-27.3 per cent; newspapers slid $9.8bn (-25.5 per cent); magazines fell by $4bn (-25.4 per cent); and radio dipped $5.9bn (-18.4 per cent). All areas of traditional media recorded their worst performance in WARC’s 40-year history of market monitoring.
Looking ahead, WARC predicts that it will take at least two years for the global ad market to fully recover. The predicted rise of 6.7 per cent in 2021 will only make up for 59 per cent of 2020’s losses. The market would then have to grow by 4.4 per cent in 2022 to match 2019’s peak of $620.6bn.
“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,” said James McDonald, Head of Data Content at WARC.
“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.”