Advertising revenue will drop by at least 7.4 percent in 2020 - report
May 17, 2020
14 May 2020
Global advertising revenue will drop by at least 7.4 percent in 2020 as the ripple effects of the coronavirus pandemic force advertisers to cut budgets, resulting in reduced income for media owners, according to Omdia.
The 7.4 percent drop represents Omdia’s best-case scenario, assuming the market will improve in the second half of the year. Omdia previously forecasted the market would rise by 2 percent in 2020, before the impact of the coronavirus became apparent.
“The coronavirus crisis is having knock-on impacts throughout the worldwide economy, spurring negative GDP growth, increased unemployment rates, low retail spending and reducing consumer expenditures,” said Kia Ling Teoh, senior analyst, media and advertising. “The advertising segment isn’t immune to this phenomenon, with the market facing a sharp decline in revenue for the year.”
Global TV advertising revenue will fall by 12 percent in 2020.
“Taking the 2008 financial crisis as a precedent, Omdia believes the pandemic will have an even greater impact on TV advertising in 2020,” said Aled Evans, senior analyst, media for Omdia. “This is occurring for two reasons: the postponement of major sporting events, and the rise of internet advertising as the preferred platform for advertisers, as shoppers buy their goods online due to lockdowns in all major countries.
Internet advertising will flatline in 2020, with a slight decline of 0.1 percent. Despite the buoyant online traffic growth generated by people spending more time online, Omdia expects advertisers to reduce overall discretionary advertising spend due to the global economic woes.
The outdoor and cinema advertising sectors will be hit heavily by COVID-19 due to reduced public foot traffic and advertisers moving budget to online platforms. Globally, outdoor advertising is forecast to fall by 21.2 percent in 2020, while cinema will decline by 19.1 percent.
In the radio advertising category, Omdia is forecasting a revenue decline of 11 percent in 2020 as radio broadcasters compete for a reduced total ad spend.
Omdia is forecasting a decline of 16.8 percent for global print media ad revenues in 2020. While other categories will return to growth in 2021 or 2022, Omdia expects print media to only return to a lower negative growth rate in 2021.
Updated Omdia forecasts indicate that the market share of internet advertising revenues will grow from 48 percent in 2019 to 51 percent in 2020, eating into shares of other media including outdoor, cinema, radio and print. Television’s market share will drop slightly from 31 percent to 30 percent.
Omdia’s worst-case scenario forecasts a prolonged lockdown that results in a major economic slump, global advertising revenue will decline by 17 percent in 2020 and will only return to modest growth in 2023 or later. However, this is less likely at the time of reporting.
During the period from 2021 through 2024, advertising revenue growth rates will remain rather conservative.
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