Spend drop ‘not as bad as 2009’

The latest predictions from Warc say that while 2020 will see a decline in ad spend of 8.1 per cent, the last recession was worse.

The damage to global adspend in 2020 caused by the coronavirus downturn will have a less severe impact than that of the financial crisis of 2009, a forecast from Warc has found. Warc’s report said global adspend will fall by 8.1 per cent this year to $563bn, compared with the 12.7 per cent contraction in 2009.

In its report, published at the end of May, the research organisation said record-high spending during this year’s US presidential campaigns will stymie the US ad market decline to 3.5 per cent in 2020, while stronger-than-expected first- quarter results showed that key media owners were in relatively good health heading into the dire second and third quarters.

The UK is second to France in terms of adspend declines in major European countries. UK adspend is forecast to shrink by 16.4 per cent, compared with a decline of 18.7 per cent in France. Germany is expecting a 6.1 per cent fall.

Before the global pandemic took hold and caused economies and societies to go into varying degrees of lockdown, Warc had forecast in February that global adspend would grow by 7.1 per cent this year.

Warc now says traditional media will fare far worse than online, with ad investment set to fall by $51.4bn (down 16.3 per cent) this year. Declines will be recorded across cinema (-31.6 per cent), out- ofhome (-21.7 per cent), magazines (-21.5 per cent), newspapers (-19.5 per cent), radio (-16.2 per cent) and TV (-13.8 per cent).

For online advertising, growth will slow to just 0.6 per cent in 2020, while social media (9.8 per cent), online video (5.0 per cent) and online search (0.9 per cent) are expected to record growth but at far lower rates than Warc previously projected. Online classified is set to fall by 10.3 per cent.

Meanwhile, in terms of sectors, the travel and tourism category is expected to record the steepest decline, with a forecast of -31.2 per cent for 2020 representing a $7.2bn reduction in spend compared with 2019, to a total of $16.0bn.

Leisure and entertainment (-28.7 per cent to $16.4bn), financial services (-18.2 per cent to $39.2bn), retail (-15.2 per cent to $57.2bn) and automotive (-11.4 per cent to $57.6bn) are all set to witness sharp declines this year.

TRENDS BY PLATFORM

Alphabet: Advertising revenue across Google Search, YouTube and Google Network Members (third parties that host Google ads) is forecast to rise by just 1.6 per cent to $137.1bn this year – the company accounts for almost one in four dollars (24.4 per cent) spent on advertising worldwide.

Facebook: Advertisers are expected to spend $77.6bn across Facebook, Messenger, WhatsApp and Instagram this year, a rise of 11.5 per cent from 2019. This marks a downgrade of $5.3bn from the preoutbreak forecast and gives Facebook a 13.8 per cent share of global advertising investment. TRENDS BY MEDIA AND FORMAT

TV: Spend is forecast to fall 13.8 per cent to $159.9bn, accounting for 28.4 per cent of all global spend this year. A third of the global TV total is in the US, where TV spend is set to fall 9.6 per cent ($5.8bn) to $54.7bn, despite a boost from presidential campaign spending.

Out- of- home: Spend is expected to fall by 21.7 per cent, or $8.7bn, in 2020 compared with a previous forecast of 5.9 per cent growth.

Cinema: Brand investment is set to fall by almost a third (-31.6 per cent) this year, but Warc thinks the sector should recoup these losses in 2021.

Radio: Investment is projected to fall by 16.2 per cent – or $5.1bn – this year, compared with a preoutbreak forecast of 1.8 per cent growth.

Newspapers: Spend on print newspapers is forecast to fall by $7.6bn, or 19.5 per cent, in 2020, compared with a pre- outbreak forecast of -5.9 per cent.

Magazines: Advertiser spend will fall by more than a fifth (-21.5 per cent), or $3.4bn.

Social media: Social formats combined are expected to be the strongest performers in 2020, recording total growth of 9.8 per cent to $96bn. This does, however, represent a downgrade of $6.4bn when compared with Warc’s pre-outbreak forecast.

Online video: Growth is forecast to slow to 5.0 per cent (to $50.3bn) this year, equivalent to 8.9 per cent of global adspend.

Search: Growth will ease to 0.9 per cent in 2020 after a downgrade of $14.1bn from February’s forecast.

TRENDS BY REGION

Europe: European adspend is forecast to fall by 12.2 per cent ($18.1bn) to $129.9bn this year, with France leading key market decline at 18.7 per cent (down $3.1bn to $13.4bn). The UK (-16.4 per cent, down $5.1bn to $31.3bn), Germany (-6.1 per cent, down $1.5bn to $24.9bn), Spain (-6.0 per cent, down $500m to $6.6bn), Italy (-21.7 per cent, down $2.1bn to $7.6bn) and Russia (-12.3 per cent, down $1.2bn to $8.5bn) will also record sharp falls.

North America: This is the region where 39.5 per cent of global adspend is transacted. Ad investment is expected to fall by 3.7 per cent, or $8.5bn, to $222.5bn this year, encompassing a 3.5 per cent fall in the US (down $7.7bn to $221.3bn) and a 6.5 per cent dip in Canada (to $11.5bn). This compares with preoutbreak forecasts of 8.8 per cent and 1.9 per cent growth respectively.

Asia-Pacific: Adspend is expected to fall 7.7 per cent ($14.4bn) to $173.5bn in 2020, accounting for 30.8 per cent of the global total. China (-8.6 per cent, down $7.5bn to $80.0bn), Japan (-6.4 per cent, down $2.5bn to $36.2bn) and Australia (-8.2 per cent, down $1.1bn to $11.9bn) are all set to record declines. Indian growth will ease to 0.7 per cent to $9.4bn in 2020.

Latin America: Adspend is set to drop 20.7 per cent (by $5.6bn) to $21.4bn this year, led by a sharp decline in Brazil (-22.5 per cent, down $3.4bn to $11.5bn), where the Covid-19 outbreak has been particularly acute.

Middle East: While not as severely impacted by coronavirus as other regions, adspend is still set to fall 15.1 per cent (by $1.8bn) to $10.4bn in 2020, as oilrich economies suffer from falling commodity prices.

Africa: Spend is expected to decrease by 19.5 per cent to $5.3bn this year, although this could be more severe if the outbreak worsens in the region.