Pandemic wipes $63b from ad market, report says

Spending on advertising worldwide is projected to fall by 10.2 percent to $557.3 billion this year, led by sharp cuts in the automotive, retail, travel, and tourism sectors as a result of the COVID-19 outbreak, a new report said.

WARC, a global marketing intelligence service, analyzed the data from 100 markets in its Global Advertising Trends report. It found $63 billion had been removed from the market worldwide in 2020 due to the pandemic's impact and a recovery could take at least two years.

The research suggested that an anticipated 6.7 percent rise during 2021 would only be enough to recoup 59 percent of this year's losses. The advertising market would need to grow by 4.4 percent in 2022 to match 2019's peak of $620.6 billion.

Traditional media endured the worst year on record in 2020 and accounted for the vast majority of the advertising market decline.

Globally, spending slumped by 19.7 percent, or $62.4 billion, to $253.9 billion. Live TV dropped 16.1 percent as revenue fell $29.9 billion, the largest absolute decline in advertising income.

Cinema fell 46.5 percent or by $1.5 billion, the out-of-home sector dropped 7.3 percent or by $11.3 billion, newspapers slid 25.5 percent or by $9.8 billion, magazines stumbled 25.4 percent or some $4 billion, and radio dropped 18.4 percent or a loss of $5.9 billion.

All sectors logged their worst performance in WARC's 40-year history of market monitoring.

The online advertising market, which had 54.4 percent of this year's advertising spending, was flat with a 0.3 percent fall and total spending of $303.3 billion. It was the first year that online advertising did not see growth in advertising spending since 2000.

Online video was the only ad format to have its prospects upgraded in the latest forecast.

Viewing leapt this year as nations imposed stay-at-home orders to quell the outbreak of the disease. Advertising spending in the sector this year was on course to rise by 7.9 percent, to $52.7 billion, and increase a further 12.8 percent in 2021.

"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 and author of the report.

Consumption demand

McDonald pointed out an immediate bounce back is not on the horizon, but said growth is likely in most corners of the industry next year.

"This will be more reflective of a tumultuous 2020 than a sterling 2021," he said. "Rising unemployment is set to depress consumption demand well into next year, and though the prospect of a vaccination program offers cause for optimism among consumers and businesses, it may only be a waypoint in a recovery that stretches two years."

The automotive sector leads 2020 losses, with advertising spending down by 21.2 percent, or $11.0 billion, to $41 billion this year. The sector is responsible for almost one in five, at 17.4 percent, of the lost dollars.

The retail sector also curbed spending dramatically by a total of $54.3 billion, which was 16.2 percent or $10.5 billion lower than it was in 2019, the report said.

The travel and tourism sector was acutely impacted by the pandemic and this has resulted in ad spend falling by 33.8 percent, or $8.4 billion, to $16.4 billion in 2020.

But the study indicated all product categories are set to increase advertising spending next year, with travel and tourism expected to rise by 19.5 percent, leading the growth.