How Covid-19 declined global ad spend by over $63b in 2020 —Report

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4 years ago

WHILE individuals and businesses still try to grapple with the ruinous effects of COVID 19, a pandemic that has shown little signs of abating, one of the sectors its advent seems to be taking its toll on, presently, is the global advertising sector.

For instance, a recent report released by WARC, a global marketing intelligence service, revealed that the global ad spend may have suffered a 10.2 per cent decline, $63.4 billion, to $557.3 billion, when 2020 winds down.

The report attributed the decline to sharp cuts in investment among the automotive, retail, travel and tourism sectors, due to the lockdown, in most parts of the globe, occasioned by COVID-19.

More worrisome is the revelation that it might take the sector at least two years to fully recover from the loss suffered as a result of the sharp dip, even though it predicts a 6.7 per cent rise in 2021, a figure that would only be sufficient to recoup 59 per cent of the 2020’s losses.

According to the report, the advertising market would need to grow by 4.4 per cent to match 2019’s peak of $620 billion.

“In absolute terms, this is worse than the last recession in 2009, when the ad market contracted by $61.3 billion (12.9 per cent). Further after accounting for inflation, the real ad market decline is double the rate of the great recession,” the report says.

The report further revealed that ad investment is down by 4.3 per cent ($9.9 billion to $221.0 billion) this year, in North America, where 39.6 per cent of global ad spend is transacted. This, the report says, comprises a 7.8 per cent dip in Canada to ($11.1 billion), and a 4.1 per cent decline in the US ($9.0 billion) to $209.9 billion.

While European ad spend goes down by 14.5 per cent ($21.5 billion to $127.0 billion) this year, with France leading key market decline at 16.7 per cent (down $2.7 billion to $13.4 billion), ad spend, in Africa, is expected to fall by almost a quarter (23.3 per cent) to $5.0 billion, this year, with a mild rise of 2.1 per cent expected in 2021 as key markets start to recover from sustained recessions.

Head of Data Content, WARC and author of the research described 2020 as the most hostile year for the advertising economy ever seen in his four decades of market monitoring.

“While 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,” he added.

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