Worldwide ad spending is still expected to grow compared to last year, says research firm eMarketer, but it has lowered its growth projections by nearly 3%. Worldwide media ad spend will increase by 7.0% to $691.7 billion in 2020 over the prior year, down from the earlier growth estimate of 7.4% to $712.02 billion.
The updated spend projections, released Thursday, include digital, directories as well as print, out-of-home, TV and radio advertising.
Why we care
Changing consumer and B2B behavior during this outbreak is causing marketers in all sectors to reevaluate their near-term advertising spend and allocations. The most recent estimates by analysts and research firms are based on an expectation that things will pick up in the second half of the year. Emarketer’s estimates are based on what it has seen in China’s ad market, where the virus was first discovered in late December 2019.
The updated modeling assumes the virus will largely be contained in the coming months and that there will be a “rebound” in the second-half of 2020, when the majority of ad spend occurs around the holiday season. The forecast assumes the 2020 Summer Olympics will take place as planned in Tokyo. The firm says it will re-evaluate if that changes or if there is “a sustained economic contraction.”
Earlier this month, WARC projected that global media spend will increase by 7.1% this year, with the expectation that brands will shift media budgets to the second half of the year. That model assumes added advertiser competition in the latter half of the year will drive up media prices as companies aim to make up for lost business.
The ability for SMBs to recover will factor in whether these forecasts can hold. “Alphabet, Facebook and Amazon stand to gain from a renewed focus on delivering short-term marketing goals in a crisis period, but a sizeable amount of their income relies upon small and medium sized enterprises, and these are the advertisers that are perhaps most vulnerable to a sharp economic downturn,” says WARC.
Amazon’s advertising business, which topped $14 billion last year, is likely to take a hit over the next four weeks as it holds off accepting non-essential items to its warehouses. Google could miss out on $4 billion in ad revenue from travel advertisers in the first half of the year due to the coronavirus outbreak, say analysts. Lower spending in travel, retail, consumer packaged goods and entertainment, will also impact Facebook’s first-half ad revenues. analysts peg those sectors at 30% to 45% of Facebook’s total revenue.
More on the news
- Emarketer lowered its ad spending forecast for China, the second-largest ad market after the U.S., by more than 6%.
- The firm expects overall media ad spend in China will grow by 8.4% this year, down from the prior estimate of 10.5%.
- Digital ad spend in China is forecasted to reach $81.06 billion in 2020, down from the previous estimate of $86.30 billion.
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- Coronavirus disrupts search, digital ad budgets
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