Global advertising spending was hit significantly harder by the 2008 financial crisis than the 2020 pandemic, according to forecasts highlighting the extraordinary resilience of digital marketing in the Covid-19 economy.
Separate estimates from GroupM, WPP’s media buying agency, and Magna, part of IPG Mediabrands, point to a rebound in 2021 that will help traditional media such as television recover, but still leave them rapidly losing ground to digital advertising.
GroupM expects global spending to fall 5.8 per cent in 2020 to $578bn when political advertising is excluded, a far smaller decrease than 2009 when the market shrank 10.9 per cent. In June GroupM forecast an 11.9 per cent hit.
Brian Wieser, head of business intelligence at GroupM, said the 2020 advertising downturn was similar in scale to 2001, when several economies in the world went into recession. “Considering how much weaker economies are in 2020 than they were in 2009 or 2001, the year could arguably be viewed through a positive lens,” he wrote.
Analysts at Magna similarly found their June estimates were too pessimistic and, when political advertising is included, forecast there would only be a 4.2 per cent drop in 2020 to $569bn.
Vincent Létang, who runs global forecasting for Magna, said the milder outcome in 2020 was principally due to the strength of digital media, which continued to grow at 8 per cent through the pandemic, accounting for well over half of all transactions.
The pandemic drove a “tremendous acceleration”, he said, as small businesses turned to online ads to survive and bigger advertisers focused on driving ecommerce instead of big campaigns to enhance their brand image. E-commerce activities went from expanding at 15-20 per cent a year, to surging by 40 per cent in 2020, he said.
Assuming vaccinations reboot the global economy and big sporting events such as the Olympics go ahead, Magna forecasts a rebound of 6.2 per cent in 2021.
Markets such as China, the US and the UK held up relatively well through 2020, in part because ecommerce and related advertising already accounted for a large proportion of spending.
Coronavirus business update
How is coronavirus taking its toll on markets, business, and our everyday lives and workplaces? Stay briefed with our coronavirus newsletter.
But while advertising through Google, Amazon, Facebook and Baidu showed better than expected growth in 2020, traditional forms of media such as television, print and outdoor advertising suffered a brutal downturn. When political spending is included, Magna put the hit at 18 per cent.
The outlook for newspapers and magazines is especially grim. Print advertising fell 25 per cent across 2020, according to GroupM, even when including digital ad revenues. Banner advertising was the only online advertising category to decline in 2020. For print as a whole, a single-digit decline is expected to continue next year.
Outdoor and cinema advertising, the biggest casualty of 2020, is expected to rebound in 2021 but will take longer to recover lost ground from the pandemic. GroupM estimates the category took a 31 per cent hit in 2020 and will see 18 per cent growth in 2021.