Global ad market will take years to recover from COVID-19

Global advertising spend is on course to fall by 10.2% – $63.4bn – to $557.3bn in 2020, WARC Data predicts, as traditional media have their worst year on record.

The details are set out in a new report, WARC Global Advertising Trends: State of The Industry 2020/21, which says it will take at least two years for the global ad market to fully recover. A forecast 6.7% rise in 2021 will only recoup 59% of 2020’s losses; the market would need to grow by 4.4% in 2022 to match 2019’s peak of $620.6bn.

“2020 was the most hostile year for the advertising economy ever seen in our 40 years of market monitoring,” says James McDonald, Head of Data Content, WARC, and author of the research. “Some platforms – such as e-commerce and social properties – have emerged 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,” he adds. “Rising unemployment is set to depress consumption demand well into next year, and though the prospect of a vaccination programme offers cause for optimism among consumers and businesses, it may only be a waypoint in a recovery that stretches years.”

WARC subscribers can read the report in full, non-subscribers can download a sample copy

Trends by product category

Automotive will see the greatest fall in absolute spending in 2020, losing £11bn, travel & tourism the biggest proportional fall at -33.8%. All product categories are set to increase advertising investment next year, but only three sectors – telecoms & utilities (+10.6%), media & publishing (+8.4%) and business & industrial (+5.3%) – will top their 2019 total.

Telecoms & utilities: down 2.9% ($2.1bn) to $70.4bn before increasing +10.6% in 2021. Online spend is forecast to grow by 5.6% in 2020 with this accelerating to 11.5% next year. Although all traditional media will see higher investment in 2021, these levels will remain below 2019 spend.
Media & publishing: down 4.6% ($3.2bn) to $65.9bn. But advertising spend from media brands to grow 8.4% in 2021 and top $70bn worldwide for the first time. TV advertising is expected to see the softest decline among traditional media this year (down 10.9% to $16.1bn) but is also forecast to see a 1.4% contraction next year.
Business & industrial: down 2.7% ($1.7bn) to $60.8bn, the softest rate of decline among all categories. Growth of 5.3% projected for next year means 2021’s investment will be only 2.5% higher than in 2019.
Retail: down 16.2% ($10.5bn) to $54.3bn, with only an increase of 5.9% projected for 2021. Online spend is expected to drop 3.4% in 2020 but see 6.9% growth next year.
Automotive: down 21.2% ($11.0bn) to $41.1bn in 2020 but forecast to see double-digit growth of 14.1% in 2021.
Travel & tourism: down 33.8% ($8.4bn) to $16.4bn, but projected to be one of the fastest-growing sectors in 2021 at +19.5%.

Trends by media and format

Linear TV: down 16.1% ($29.9bn) to $155.6bn. Despite a fillip from presidential campaign spending, the US TV market – the world’s largest – still fell by a tenth this year to $54.4bn. Globally, TV adspend is expected to rise by just 1.1% in 2021, leaving the market 15.2% lower than its pre-COVID total in 2019.
Out of home: down 27.3% ($11.3bn). OOH is forecast to be the second-fastest growing medium in 2021, with adspend rising by a fifth (20.2%), though a total of $36.3bn will be 12.7% lower than in 2019.
Cinema: down by almost a half in 2020, but will lead 2021 growth with a 41.2% rise.
Linear radio: down 18.4% ($5.9bn). A modest 4.6% in 2021 will leave spending 14.7% lower than in 2019.
Newspapers: down 25.5% ($9.8bn) – this is the worst performance for newspapers in more than 40 years, and the market is expected to be largely flat (-0.4%) in 2021.
Magazines: down 25.4% ($4.0bn), with a similar level of investment forecast next year.
Social media: up 9.3% to $98.3bn and projected to rise 12.2% in 2021, pushing the market to a value of $110.3bn, almost a fifth (18.6%) of all advertising spend.
Online video: up 7.9% to $52.7bn and expected to be the fastest-growing format in 2021, with spend up by 12.8%.
Paid search: down 1.9% but forecast to grow 7.0% in 2021 – pushing the market to $130.6bn, or more than a fifth (22.0%) of all advertising spend.

Trends by region

North America: down 4.3% ($9.9bn) to $221.0bn. The region will see spend rise by 3.8% next year, with the US recouping 89% of 2020’s losses.
Asia-Pacific: down 9.7% ($18.8bn) to $174.4bn, before rising 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 forecast to grow 10.2% in 2021, recovering 60% of 2020’s losses: UK +14.7%, Germany +9.0%, Spain +12.5%, France +7.1%, Italy +11.3%, Russia +6.8%.
Latin America: down 32.3% in 2020, led by a sharp 43.2% decline in Brazil (though this is inflated by a sharp devaluation of the Brazilian Real against the US dollar). Spend is expected to be flat in Latin America next year.
Middle East: down 20.2% ($2.9bn) to $11.3bn 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 $5.0bn this year, with a slight 2.1% rise expected in 2021 as key markets start to recover from sustained recessions.