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WARC COVID 19 Impact Global Ad Spend Jun2020Prior to the global outbreak of COVID-19, the total global investment in advertising for 2020 was forecast to grow by 7.1% year-over-year (y-o-y). But 6 months into the year and with the pandemic changing everything from customer behavior to marketing and advertising budgets and tactics, new data [download page, sample report] from WARC now predicts that advertising investment this year will drop by an estimated 8.1% ($49.6 billion) over 2019.

Traditional advertising channels are expected to be hardest hit by changes wrought by COVID-19. Cinema advertising, which had been expected to see 5% y-o-y growth this year is now predicted to experience a fall of 31.6%, making it the hardest hit of all channels.

Out-of-home (OOH) advertising is now forecast to decline by 21.7% y-o-y, compared to the 5.9% growth originally forecast. And, although magazines and newspapers were already projected to see declines this year (5.6% and 5.9%, respectively), they are now expected to lose 21.5% and 19.5% in ad spending, respectively, over 2019. Other traditional channels now anticipated to experience losses also include radio (-16.2%) and TV (-13.8%).

Online advertising channels are expected to come out of the crisis somewhat less scathed. Social media global ad spend is now forecast to increase by 9.8% y-o-y (vs. 20% pre-COVID-19). Online video is predicted to increase by 5.0% (vs. 20.2%), while online display overall (including social media and online video) will increase by 2.1% (vs. 14.3%) and search by 0.9% (vs. 12.4%).

The Impact on US Ad Spend and Other Markets

The impact of the COVID-19 pandemic on ad spend differs depending on the region. In the US, pre-outbreak estimates showed US ad spend growing by 8.8% y-o-y in 2020. The adjusted estimates now predict that US ad investment will drop by 3.5% y-o-y.

While this decrease in ad spend in the US is significant, other countries are expected to see even steeper losses. Markets expected to see the biggest y-o-y losses in advertising investment include Brazil (down 22.5%), Italy (down 21.7%), South Africa (down 19.6%), France (down 18.7%) and the UK (down 16.4%).

For its part, new MAGNA Global data projects a 4.3% decline in US ad revenue this year and a 7% drop globally. Within the US linear ad sales – consisting of radio, TV, print and out-of-home – are forecast to decrease by 13%, while digital ad sales are predicted to end the year slightly up (+2%), with digital video (+10%) powering the way.

Transportation and Tourism Hit Hard

With stay-at-home directives and travel restrictions put in place to varying degrees across the globe, it’s not surprising that Transport and Tourism is expected to be the industry to suffer the greatest loss in advertising spend. Pre-outbreak, WARC predicted this industry to see an estimated gain of 9.0% y-o-y. Post-outbreak forecasts show it falling by 31.2%. This is backed up by a separate survey from the IAB, which revealed that about 7 in 10 (68%) ad sellers felt that travel and tourism brands would be the hardest hit for the period of March – December 2020.

Ad spend in the Leisure and Entertainment industry is also projected to see significant declines (28.7% y-o-y) in 2020, despite the modest gains (4.8%) expected pre-outbreak.

The one industry that is still expected to see growth in ad spend this year is Telecoms and Utilities. That said, the initial estimate of 8.5% y-o-y growth has been cut by close to half, with a post-outbreak estimate of a 4.3% y-o-y increase in advertising spend this year.

A sample of the report can be found here.

About the Data: Figures are based on WARC’s Adspend Database. Data are net of discounts, including agency commissions, and excludes production costs.

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