Global advertising revenue is expected to fall by at least 7.4% in 2020 as the ripple effects of the coronavirus pandemic are pushing advertisers to slash their budgets. This is resulting in reduced income for media owners.
The 7.4% represents a best-case scenario, assuming that the market is going to improve in the second half of the year. Research and analytics company Omdia, previously predicted the market would increase by 2% in 2020, before the obvious impact of COVID-19.
“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% this year.
“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 this year, with a slight decline of 0.1%. Despite the resilient online traffic growth that is caused by people spending more of their time online, Omdia is expecting advertisers to reduce their overall discretionary advertising spend because of global economic issues.
The outdoor and cinema advertising sector is expected to be most heavily impacted by COVID-19 as a result of reduced foot traffic and advertisers moving their budget to online platforms. Globally, outdoor advertising is predicted to fall by 21.2% in 2020, while cinema will decline by 19.1%.
In the radio advertising category, Omdia is forecasting a drop in revenue of 11% this year as radio broadcasters compete for a decreased total advertising spend.
Omdia has forecast a drop of 16.8% for global print media ad revenues in 2020. Whilst other categories are expected to return to growth in 2021 or 2022, Omdia predicts print media to only return to a lower negative growth rate in 2021.
Updated forecasts point towards the market share of internet advertising revenues increasing from 48 % in 2019 to 51% in 2020, eating into shares of other media including outdoor, cinema, radio and print. Television’s market share will drop slightly from 31% to 30%.
The worst-case scenario forecasts a prolonged lockdown which results in a massive economic slump, global advertising revenue will decline by 17% in 2020, and will only return to modest growth in 2023 or later.
During the period from 2021 through 2024, advertising revenue growth rates will remain rather conservative.