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Ad spend bounce back from Covid-19 impact not immediate predicts Warc report

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The global advertising market will take two years to recover from the impact of the Coronavirus pandemic, with spend expected to fall this year by over 10% claims a new report looking at the worst year for traditional media on record.

After a record year of spend in 2019 of $620.6bn, the Warc Global Advertising Trends: State of the Industry 2020/21 report has predicted that  global advertising spend will have reduced $63.4bn this year, with $557.3bn being spent – a fall by 10.2% year on year, despite the $4.9bn spent on the US presidential election.

The brand sector spend

Brands from automotive, retail, travel and transportation have all cut spend in the wake of the spread of the virus and the resulting restriction to combat it all around the world being introduced, with the data from the report, based on 100 markets, pointing towards a recovery period of at least two years for the global ad market.

2021 is forecast to see an increase in spend of 6.7%, with a recovery of only 59% of the losses from this year and further growth of 4.4% is needed the following year the reach the 2019 mark. Previously the worst contraction of spend was recorded in 2009 during the recession when the market contracted by $61.3bn or 12.9%.

Automotive lost over a fifth of spend, down by $11bn (21.2%) to £41bn while retail fell by $10.5bn (-16.2%) to $54.3bn. Travel and tourism was another casualty with a decrease of a over a third, down $8.4bn (-33.8%) to $16.4bn.

The only sector to increase spend was across government and not-for-profit.

The impact on media sectors

Traditional spend globally, receded by almost a fifth (19.7%) at $62.4bn to $253.9bn, with linear TV the hardest hit by $29.9bn (-16.1%) while perhaps predictably cinema and out-of-home recorded year-on-year declines of 46.5% and 27.3% respectively. Newspaper and magazine ad spend were also both down by over a quarter; -$9.8bn (-25.5%) and -$4bn (-25.4%) respectively. Radio fell by $5.9bn (18.4%) too.

Digital advertising spend was reported as flat (-0.3%) at $303.3bn, the first year it has not recorded growth since during the dot com crash of 2000, while the implications for the growth in streaming this year have seen spend forecast expected to rise by 7.9% this year to $52.7bn and could growth by a further 12.8% next year.

Paid search is predicted to decline by 1.9% this year but recover with a growth of 7% to $130.6bn in 2021, which would see it count for 22% of all advertising spend.

Author of the research, James McDonald, Head of Data Content, WARC, described this year as “the most hostile year for the advertising economy ever seen” in the history of monitoring the industry and highlighted the “severe” impact witnessed by the media landscape outside of ecommerce and social media spend.

“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,” he added.