WARC: 2020 Ad Revenues Down 10 Percent Due to COVID-19

Global ad spend is projected to be down by 10.2 percent to $557.3 billion in 2020, according to new estimates from WARC.

The COVID-19 pandemic has removed some $63 billion from the global ad market this year, WARC says in its State of The Industry 2020/21 report, led by large cuts in the automotive, retail and travel and tourism sectors. In May, WARC had forecast a 2020 reduction of about 8.1 percent.

Looking ahead, the international marketing intelligence service says that it will take at least two years for the global ad market to fully recover. Next year, ad revenues are expected to rise by 6.7 percent, recouping 59 percent of this year’s losses. To match 2019’s peak of $620.6 billion, the market would need to rebound by 4.4 percent in 2022.

The pandemic has taken an especially harsh toll on traditional media (linear TV, cinema, out of home, newspapers, magazines and radio), which will be down 19.7 percent this year to $253.9 billion. Linear TV alone saw the largest absolute cuts, down 16.1 percent to $155.6 billion. It accounts for 27.9 percent of all adspend. Next year, WARC sees a small increase of 1.1 percent. Meanwhile, the online ad market is flat at $303.3 billion. Per WARC, online video had a good year, with an expected gain of 7.9 percent to $52.7 billion. In 2021, WARC projects a 12.8 percent boost.

By market, North America will be down 4.3 percent in 2020 to $221 billion, with an expected 3.8 percent gain next year. AsiaPac revenues are on track to be down by 9.7 percent this year to $174.4 billion, rebounding by 8.5 percent in 2021, with China, Japan, Australia and India set for record growth. Europe will be down 14.5 percent this year to $127 billion, led by France. Next year, ad revenues should rise by 10.2 percent, with gains expected in the U.K., Germany, Spain, France, Italy and Russia. LatAm revenues will take a 32.3 percent hit this year, largely as a result of declines in Brazil. Spending is expected to be flat in 2021. Meanwhile, Middle Eastern revenues will fall by 20.2 percent this year, and Africa will be down 23.3 percent.

James McDonald, head of data content at WARC, and author of the research, commented, “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.

“An immediate bounce back is not on the horizon; while growth is expected in most corners of the industry next year, this will be more reflective of a tumultuous 2020 than a sterling 2021. 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.”