Advertising Trends: The impact of COVID-19 on ad investment
Global advertising spend is set to fall by 8.1% ($49.6bn) to $563bn this year, led by severe cuts in investment among major product sectors as a result of the COVID-19 outbreak finds WARC, the international marketing intelligence service.
- Alphabet: Alphabet’s advertising revenue – across Google Search, YouTube, and Google Network Members (third parties that host Google ads) – is forecast to rise by just 1.6% to $137.1bn this year – before the deduction of traffic acquisition costs (TAC), which amounted to $30.1bn in 2019. This means the company accounts for almost one in four dollars (24.4%) spent on advertising worldwide. The latest projection represents a downgrade of $12.9bn from WARC’s pre-outbreak forecast.
- Facebook: Advertisers are expected to spend $77.6bn across Facebook, Messenger, WhatsApp and Instagram this year, a rise of 11.5% from 2019. This marks a downgrade of $5.3bn from the pre-outbreak forecast and gives Facebook a 13.8% share of global advertising investment.
Trends by media and format
- TV: Spend is forecast to fall 13.8% to $159.9bn, 28.4% of all global spend this year. A third of the global TV total is transacted in the US where, TV spend is set to fall 9.6% ($5.8bn) to $54.7bn despite a fillip from presidential campaign spending.
- Out of home: The OOH sector has suffered from a severe lack of reach during international lockdowns. Spend is expected to fall by 21.7%, or $8.7bn, in 2020 compared to a previous forecast of 5.9% growth.
- Cinema: Like OOH, cinema advertising has been heavily impacted by lockdown conditions. Brand investment is set to fall by almost a third (-31.6%) this year but should recoup these losses in 2021.
- Radio: Investment in radio ads is projected to fall by 16.2% – or $5.1bn – this year, compared to a pre-outbreak forecast of 1.8% growth.
- Newspapers: Spend on print newspapers is forecast to fall by $7.6bn, or 19.5% in 2020, compared to a pre-outbreak forecast of -5.9%.
- Magazines: Like newspapers, print magazines have been heavily impacted by reduced circulation. Advertiser spend will fall by over a fifth (-21.5%), or $3.4bn in 2020.
- Social media: Social formats, combined, are expected to be the strongest performers in 2020, recording total growth of 9.8% to $96bn. This does, however, represent a downgrade of $6.4bn when compared to WARC’s pre-outbreak forecast.
- Online video: Growth is forecast to ease to 5.0% (to $50.3bn) this year, equivalent to 8.9% of global advertising spend. YouTube is expected to account for three in ten cents.
- Search: Growth will ease to less than a percent (+0.9%) in 2020 after a downgrade of $14.1bn from February’s forecast.
- North America: In North America, where 39.5% of global adspend is transacted, ad investment is expected to fall by 3.7% – or $8.5bn – to $222.5bn this year, encompassing a 3.5% fall in the US (down $7.7bn to $221.3bn) and a 6.5% dip in Canada (to $11.5bn). This compares to pre-outbreak forecasts of +8.8% and +1.9% respectively.
- Asia-Pacific: Advertising spend is expected to fall 7.7% ($14.4bn) to $173.5bn in 2020, 30.8% of the global total. China (-8.6%, down $7.5bn to $80.0bn), Japan (-6.4%, down $2.5bn to $36.2bn), and Australia (-8.2%, down $1.1bn to $11.9bn) are all set to record declines. Indian growth will ease to +0.7% to a total of $9.4bn in 2020.
- Europe: European adspend is forecast to fall by 12.2% ($18.1bn) to $129.9bn this year, with France leading key market decline at -18.7% (down $3.1bn to $13.4bn). The UK (-16.4%, down $5.1bn to $31.3bn), Germany (-6.1%, down $1.5bn to $24.9bn), Spain (-6.0%, down $500m to $6.6bn), Italy (-21.7%, down $2.1bn to $7.6bn) and Russia (-12.3%, down $1.2bn to $8.5bn) will also record sharp falls.
- Latin America: Adspend is set to fall 20.7% ($5.6bn) to $21.4bn this year, led by a sharp decline in Brazil (-22.5%, down $3.4bn to $11.5bn) where the COVID-19 outbreak has been particularly acute.
- Middle East: While not as severely impacted by COVID-19 as other regions, adspend in the Middle East is still set to fall 15.1% ($1.8bn) to $10.4bn in 2020, as oil-rich economies suffer from falling commodity prices.
- Africa: Spend is expected to fall 19.5% to $5.3bn this year, though this could be more severe if the outbreak worsens in the region.
This latest Global Ad Trends report complements WARC’s content on marketing in the COVID-19 crisis and the recently launched WARC Guide to Marketing in the COVID-19 Recession.