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WARC COVID 19 Impact 2020 Global Adspend Forecast Oct2020The negative impact COVID-19 has had on global ad spend is being felt almost across the board, but unsurprisingly it’s offline channels that have been hit the hardest. In a recent report [download page], WARC detailed revisions to its 2020 global ad spend forecast from January, showing that offline ad spend will be $60.2 billion less than originally estimated (-18.6%), while online ad spend has been revised down by $36.5 billion (-10.9%).

Even though consumers may be spending more time at home, TV accounts for more than half of the more than $60 billion difference between January’s and September’s forecast offline ad spend. Originally estimated to be at $192.5 billion this year, global ad spend on TV saw an absolute revision of -$32.6 billion, down to $159.9 billion (-16.9%).

Although TV’s revision in ad spend was greatest when it comes to total dollar amount, in terms of the percentage of spend decreased, cinema and out-of-home were impacted the most. Cinema saw its projected ad spend cut by 37% (from $3.5 billion to $2.2 billion), while out-of-home’s forecast ad spend dropped by about 28% from $43.5 billion to $31.5 billion.

Online ad spend has not been immune to the cuts in advertising spending since the pandemic. Online display spend saw an absolute revision of -$18.2 billion to $152.1 billion, while search (-$14.1 billion to $126.0 billion), social media (-$14.1 billion to $96.0 billion) and online video (-$13.5 billion to $50.3) also saw downward revisions.

The Exception: E-commerce Ad Spend

The one area of global ad spend that appears to have been impacted positively by the pandemic is e-commerce. As many physical stores have had to shut for at least part of the year, WARC’s data shows that e-commerce ad spend experienced an increase of $1.1 billion from January’s forecast, adjusted to $58.5 billion in September.

Indeed, while digital ad spend is expected to stall this year, e-commerce has seen steady growth in sales as well as ad spend. WARC predicts that e-commerce is “in a strong position to capture reallocated budgets by using sales data to demonstrate ad performance and ROI during a volatile economic climate.”

With an accelerated shift to e-commerce, tech giants remain dominant players when it comes to capturing ad dollars. Amazon, which is the third-largest advertising business in the US, is ranked fourth globally, behind Alphabet (Google’s holding company), Facebook and China’s Alibaba. That said, Amazon is expected to see ad spend on its network increase by 35.6% over last year to reach $18.1 billion. This is compared to Alibaba’s projected 6.6% year-over-year increase to $23.5 billion. With similar growth expected next year, Amazon is set to account for an even greater portion of e-commerce ad spend in 2021.

In the US, brands are seeing the benefits of advertising on Amazon as an alternative to the Facebook/Google duopoly. Feedvisor found that some 54% of brands advertising on Amazon felt it was a great value. And, Q2 2020 data from Tinuiti shows that Sponsored Brand ad spend increased considerably year-over-year, while Sponsored Products (Amazon’s most prominent ad format) accounts for the largest share of engagement metrics such as impressions and clicks.

The full report can be downloaded here.

About the Data: WARC’s forecast figures are net of discounts and include agency commission and exclude production costs.

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