Advertising Revenues Projected To Decline In 2020 Worldwide

1 week ago 3

Advertising revenues to be down and will impact most industries.

Red arrow on white city skyscrapers background signifying a decline in the economy.

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The deeper and deeper we get into the economic and societal impacts of the Covid-19 pandemic, the more clear it is that the advertising industry, and the many different types of companies that advertise, are being hit hard.

Zenith, a respected media planning firm, released a new report today regarding the future of advertising expenditures worldwide. They project that total global advertising expenditures will decline just over 9% for all of 2020. In the U.S. they see the 2020 decline as being down 7%. In comparison they reported that the U.S. “great recession” impact on U.S. advertising was a negative 9.5% in 2009.

Zenith is forecasting a 5.8% gain in global advertising spend in 2021 partly because of the Summer Olympics in Tokyo which have been moved to 2021.

Earlier in the pandemic I wrote about the future for advertising expenditures, including coverage of a study of U.S. advertising executives. As I quoted Rob Norman, long-time digital advertising executive, using a long-standing sailors’ analogy, “It’s an ill wind that blows no one any good.”

Digital advertising continues to be a somewhat, though dim, bright spot, in the advertising eco-system currently. The growth of digital advertising is being affected by the pandemic, but overall digital advertising continues its march forward. Zenith said in their release of the report “that digital advertising will account for 51.0% of global ad spend this year.”

Digital ad spend will exceed two-thirds of the total by 2024.

Ad spending dominated by digital platforms.

Statista Advertising and Media Outlook

This is the first time that digital ad spend has been a majority of total ad spend worldwide. And it is going to continue to grow. “The coronavirus forced brands to embrace digital advertising even faster than expected and made digital transformation of businesses more urgent than ever,” said Jonathan Barnard, Zenith’s head of forecasting.

Zenith pointed out that the traditional media outlets like TV and radio have suffered less than other traditional advertising platforms like print and magazine advertising, both of which are predicted to be down 20% or more this year.

“In past downturns, ad revenue is quick to fall and slow to recover relative to GDP. And since in this case, the economy follows the uncertain trajectory of the pandemic, no one has good visibility into the timing and depth of this recession. What is clear from the past is that brands that maintain or increase their share of voice during the tough times earn lasting market share gains in the recovery - gains that often persist for 5 years or more beyond the crisis,” said Scott McDonald, President and CEO of the Advertising Research Foundation based in New York, and a well-known research expert who has worked at a number of prominent media companies over the years.

Another well-known advertising expert and long-time advertising technology executive, Dave Morgan, CEO of Simulmedia, looked into his crystal ball and saw a continued decline in traditional U.S. television advertising in the years ahead, with growth coming from the Connected TV space, “I think that U.S. TV ad spend this year will be down in the 15% range from last year. I think that 2021 will be down just slightly to 2019, and then decline 5% per year over the subsequent couple of years. Advanced TV ad spend - data driven linear, addressable and CTV - will grow 30% this year and 30-50% per year after that for the next five years,” Morgan concluded.

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