The global advertising market will take years to recover from COVID-19

Global ad spending is on track to fall 10.2% — $63.4 billion — to $557.3 billion in 2020, WARC Data predicts, as traditional media experiences its worst year on record.

The details are laid out in a new report, WARC Global Advertising Trends: State of The Industry 2020/21, which indicates that it will take at least two years for the global advertising market to fully recover. A projected 6.7% rise in 2021 will recover only 59% of 2020’s losses; the market is expected to grow by 4.4% in 2022 to reach the 2019 peak of $620.6 billion.

“2020 has been the most hostile year for the advertising economy in our 40 years of market surveillance,” says James McDonald, Data Content Manager, WARC and author of the research. “Some platforms – such as e-commerce and social properties – emerged relatively unscathed, but the vast majority of the media landscape witnessed a severe material impact.

“An immediate rebound is not on the horizon,” he adds. “Rising unemployment is expected to depress consumer demand well into next year, and while the prospect of a vaccine program is giving rise to optimism among consumers and businesses, that may not be only a landmark in a recovery that spans years.”

Trends by product category

Motoring will see the biggest drop in absolute spending in 2020, losing £11bn, with travel and tourism the biggest proportional drop at -33.8%. All product categories are expected to increase their advertising investments next year, but only three sectors – telecoms and utilities (+10.6%), media and publishing (+8.4%) and business and industry (+5, 3%) – will exceed their 2019 total.

  • Telecoms and utilities: down 2.9% ($2.1 billion) to $70.4 billion before increasing by +10.6% in 2021. Online spending is expected to increase by 5.6% in 2020, with an acceleration to 11.5% next year. While all traditional media will see higher investments in 2021, these levels will still be below 2019 spending.
  • Media and Publishing: down 4.6% ($3.2 billion) to $65.9 billion. But ad spending by media brands will grow 8.4% in 2021 and top $70 billion globally for the first time. TV advertising is expected to experience the smallest decline among traditional media this year (down 10.9% to $16.1 billion), but is also expected to experience a 1.4% contraction next year.
  • Commercial & industrial: down 2.7% ($1.7 billion) to $60.8 billion, the lowest rate of decline of any category. The 5.3% growth forecast for next year means that investment in 2021 will be only 2.5% higher than in 2019.
  • Detail: down 16.2% ($10.5 billion) to $54.3 billion, with only a 5.9% increase forecast for 2021. Online spending is expected to drop 3.4% in 2020 but see 6.9% growth next year.
  • Automotive: down 21.2% ($11.0 billion) to $41.1 billion in 2020 but forecast double-digit growth of 14.1% in 2021.
  • Travel & tourism: down 33.8% ($8.4 billion) to $16.4 billion, but is expected to be one of the fastest growing sectors in 2021 at +19.5%.

Trends by media and format

  • Linear television: down 16.1% ($29.9 billion) to $155.6 billion. Despite a surge in presidential campaign spending, the US television market – the largest in the world – fell another tenth this year to $54.4 billion. Globally, TV ad spend is expected to grow just 1.1% in 2021, leaving the market 15.2% below its pre-COVID total in 2019.
  • Outside the house: down 27.3% ($11.3 billion). OOH is expected to be the second fastest growing medium in 2021, with ad spend growing by a fifth (20.2%), although a total of $36.3 billion is 12 less. .7% to that of 2019.
  • Movie theater: down by almost half in 2020, but will lead growth in 2021 with a 41.2% increase.
  • Linear Radio: down 18.4% ($5.9 billion). A modest 4.6% in 2021 will leave spending 14.7% lower than in 2019.
  • Newspapers: down 25.5% ($9.8 billion) – this is the worst performance for newspapers in over 40 years, and the market is expected to be largely flat (-0.4%) in 2021.
  • Magazines: down 25.4% ($4.0 billion), with a similar level of investment expected next year.
  • social media: up 9.3% to $98.3 billion and is expected to rise 12.2% in 2021, pushing the market to a value of $110.3 billion, almost a fifth (18.6 %) of all ad spend.
  • online video: up 7.9% to $52.7 billion and expected to be the fastest growing format in 2021, with spending up 12.8%.
  • Paid search: down 1.9% but expected to grow 7.0% in 2021, which will take the market to $130.6 billion, or more than one-fifth (22.0%) of all ad spend.

Trends by region

  • North America: down 4.3% ($9.9 billion) to $221.0 billion. The region will see spending increase by 3.8% next year, with the United States recouping 89% of 2020 losses.
  • Asia Pacific: decrease of 9.7% ($18.8 billion) to $174.4 billion, before increasing by 8.5% in 2021: China +7.7%, Japan +10.2%, Australia +13, 2%, India +14.2%.
  • Europe: down 14.5% ($21.5bn) to $127.0bn, but expected to grow 10.2% in 2021, recouping 60% of 2020 losses: UK +14.7 %, Germany +9.0%, Spain +12.5%, France +7.1%, Italy +11.3%, Russia +6.8%.
  • Latin America: 32.3% decline in 2020, driven by a sharp decline of 43.2% in Brazil (although this is inflated by a sharp devaluation of the Brazilian real against the US dollar). Spending is expected to be stable in Latin America next year.
  • Middle East: down 20.2% ($2.9 billion) to $11.3 billion in 2020, as oil-rich economies suffer from falling commodity prices. Growth of 7.0% is forecast for next year.
  • Africa: down 23.3% to $5.0 billion this year, with a slight uptick of 2.1% expected in 2021 as major markets begin to recover from prolonged recessions.
A sample WARC Global Advertising Trends: State of the Industry 2020/21 report is available for Download here. The full report is available to WARC Data subscribers.

This latest report on global advertising trends complements the report recently published by WARC Marketing Toolkit 2021a guide to the six major challenges that brands will face in the coming year, helping companies to plan in their context and seek out new opportunities to develop effective strategies for growth.

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